Social welfare payment for rent - Landlord

hawkinsk11

Hi, looking to rent out a house and i only seem to get people who are getting welfare payment for rent. I'm not sure what as a landlord i have to give to them, or what effects it has on me tax wise etc..

any advise, help, warnings would be welcome.

athtrasna

No matter who you rent to you must register with the PRTB and you must pay tax. Rent Allowance tenants are no different in that respect.

The_Conductor

Most landlords who accept social welfare payments insist on receiving the payment directly- following quite a few bad experiences which have been reported in the media. The tenant then pays the top up themselves.

The tenancy is identical to any other- you register it with the PRTB, you make your tax return, you address any issues should they arise- as though these people were absolutely no different than anyone else.

S.

gibo_ie

As smccarrick says, the DSFA pay a % of the rent (this can go direct to you or to the tenant - the tenant has the choice) and then the tenant pays you the remainder of the rent.
Now the % the DSFA pays is based on numerous factors like how many parents & children. They then come up with a maximum amount the property is worth to them (based on how many bedrooms the person should have) and pay a % based on this (fair market rate and all).
Now on the first Monday of every month, you must sign a form with the tenant to confirm they are still living at this property and how much they pay extra themselves each month. Without this form you dont get paid!!!

It has its benefits and its pitfalls. You still get the full amount in most cases and tenants could be good or bad (but then non welfare tenants are also).

I have been doing this for a while now, it is a bit more hassle but no big deal really.
Also note that the rates that DFSA pay have dropped this month

hawkinsk11

So do you still get your mortgage relief or is that stopped?? don think i can afford to loose that

Ste.phen

As I understand it, If you're still living there, the mortgage relief wouldn't be affected. If not, you shouldn't be getting it anyway, regardless of who you rent it to.

The_Conductor

Ste.phen wrote: »

As I understand it, If you're still living there, the mortgage relief wouldn't be affected. If not, you shouldn't be getting it anyway, regardless of who you rent it to.

I'm sorry.
This is totally incorrect.

If you rent out your property- you are not entitled to claim TRS on your mortgage. You do not get mortgage relief at source- at all.

One of the costs associated with property rental- is the interest component of the mortgage. It is an allowable deduction up to 75% of gross interest charged.

Thus- if your rental income is 2000, and your mortage payment includes 750 of interest- your net income for tax purposes is 1250- no the 2000 (note: you will most probably have other allowable deductions too).

This changed in the last budget- prior to that- mortgage interest relief for landlords (classified as 'investors' was 100%- it is now 75%, and the proposal is to reduce it to 50% in December- and to abolish it for investors along with everyone else- in its totality over an 8 year period- as it is clearly a market distortion).

S.

Ste.phen

smccarrick wrote: »

I'm sorry.
This is totally incorrect.

If you rent out your property- you are not entitled to claim TRS on your mortgage. You do not get mortgage relief at source- at all.

I'll bow to your superior knowledge on this, but I thought if you lived there yourself and were only renting rooms (rent a room scheme) it was still your PPR and qualified for TRS?

The_Conductor

Ste.phen wrote: »

I'll bow to your superior knowledge on this, but I thought if you lived there yourself and were only renting rooms (rent a room scheme) it was still your PPR and qualified for TRS?

That is correct.
In this case the OP stated he wanted to 'rent out a house'. He did not mention anything about taking in lodgers.

hawkinsk11

right so to come clean to certain extent. I got to rent out the house cause i cant live their anymore. the problem is that there are a lot of rented properties in the area. to rent it out for the going rate there would be a shortfall of €350 per month to pay the mortgage. thats if i dont register and keep my mortgage relief.

problem 2 most people well nearly all people who ring are on social. if i register i loose my mortgage relief which mean the shortfall is €500. I cant afford that. but i cant seem to rent it out to non social people


Can you register and some how keep your mortgage relief?
i'm not trying to dodge taxes to keep my profit i'm trying to just get by.

lolo2

That is trying to dodge taxes. Plenty of people (myself included) who did not buy property because it was obvious how over valued it was, are now paying for others mistakes/misfortune, why should you get interest relief? You are not entitled to it. Why should other taxpayers pay your mortgage because you (and I do sympathise) misjudged the market? Not meant in a nasty tone, I do feel for people who have been unlucky, but if everyone decides to starts "trying to get by" in this manner it only makes the problem worse for the nation.

The_Conductor

hawkinsk11 wrote: »

right so to come clean to certain extent. I got to rent out the house cause i cant live their anymore. the problem is that there are a lot of rented properties in the area. to rent it out for the going rate there would be a shortfall of €350 per month to pay the mortgage. thats if i dont register and keep my mortgage relief.

problem 2 most people well nearly all people who ring are on social. if i register i loose my mortgage relief which mean the shortfall is €500. I cant afford that. but i cant seem to rent it out to non social people


Can you register and some how keep your mortgage relief?
i'm not trying to dodge taxes to keep my profit i'm trying to just get by.

You can not rent out the property and keep mortgage relief. Full stop. There are *no* exceptions. You can claim (at present) up to 75% of the mortgage interest as an allowable expense against your rental income before determination of your tax bill on the rental income (you may also have other allowable expenses).

Whether or not the tenant is a rent-allowance tenant or not is irrelevant. Any tenant- regardless of how they pay their landlord, is entitled to claim rent-relief. Revenue are moving slowly on this (as always)- but their new database can match up the rent-relief claimed against a property and then as a secondary step- against the owner of the property.

If you rent out your property-

1. Your tenant can claim rent relief
2. They have to specify the address of the property- not your RSI no.- but the ownership of the property is registered, coincidentally, with the revenue commissioners (remember getting ripped off on stamp duty- or not if you were a FTB- well, registration is a function of the Revenue Commissioners).
3. When Revenue join up the dots (which they have been increasingly good at doing lately-

a. you have a massive tax bill with penalties
b. its possible you may have a stamp duty bill to pay
c. you get a conviction

This is all aside from your legal obligation to register any tenancies with the PRTB- and the Revenue Commissioner are also entitled to view their database. If you don't register- its an automatic EUR5k fine per offence- and if you do have a problem with your tenants- the prescribed mechanism for dealing with them under the 2004 Residential Tenancies Act- is via the PRTB. You could end up in a situation where you weren't even able to evict them if they didn't pay rent........

The loopholes that cowboy landlords used for years- are in the main in the past. Environmental Health Officers, the PRTB and the Revenue Commissioners are all mechanisms for keeping everyone above board.

You also have to make and annual tax return and pay income tax on your rental income by the way- you do know that?

snubbleste

Some government quango would do well to put your post in writing smccarrick and mailshot all suspected rental properties in the state.

hawkinsk11

smccarrick wrote: »

You can not rent out the property and keep mortgage relief. Full stop. There are *no* exceptions. You can claim (at present) up to 75% of the mortgage interest as an allowable expense against your rental income before determination of your tax bill on the rental income (you may also have other allowable expenses).

Whether or not the tenant is a rent-allowance tenant or not is irrelevant. Any tenant- regardless of how they pay their landlord, is entitled to claim rent-relief. Revenue are moving slowly on this (as always)- but their new database can match up the rent-relief claimed against a property and then as a secondary step- against the owner of the property.

If you rent out your property-

1. Your tenant can claim rent relief
2. They have to specify the address of the property- not your RSI no.- but the ownership of the property is registered, coincidentally, with the revenue commissioners (remember getting ripped off on stamp duty- or not if you were a FTB- well, registration is a function of the Revenue Commissioners).
3. When Revenue join up the dots (which they have been increasingly good at doing lately-

a. you have a massive tax bill with penalties
b. its possible you may have a stamp duty bill to pay
c. you get a conviction

This is all aside from your legal obligation to register any tenancies with the PRTB- and the Revenue Commissioner are also entitled to view their database. If you don't register- its an automatic EUR5k fine per offence- and if you do have a problem with your tenants- the prescribed mechanism for dealing with them under the 2004 Residential Tenancies Act- is via the PRTB. You could end up in a situation where you weren't even able to evict them if they didn't pay rent........

The loopholes that cowboy landlords used for years- are in the main in the past. Environmental Health Officers, the PRTB and the Revenue Commissioners are all mechanisms for keeping everyone above board.

You also have to make and annual tax return and pay income tax on your rental income by the way- you do know that?

Thanks for that, its very easy to preach (lola2-by the way i didn't mis judge the housing market-i missed judged a relationship) but thanks smccarrick for laying out what actually happens. I think its not uncommon for most people to ask ' why do i have to pay this and what happens if i dont..'