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New landlord with questions

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  • 15-05-2011 6:23pm
    #1
    spindizzy
    Banned (with Prison Access) Posts: 104 ✭✭


    Hi,

    letting my house for the first time and have a few questions if anyone can help.

    If accepting rent allowance is there any paper work on my part to be filled in, apart the PRTB registration?

    I know rental income is taxable but can it be offset against the mortgage so if really there is no profit than no tax is paid?

    Rent allowance tenants are treated no differently from non rent allowance tenants in the sense of lease and deposit and rent paid in advance?

    Is there a delay on tenants getting rent allowance, should I expect them to make excuses early in the lease for not having rent or should it be sorted very quickly?

    If tenant is currently receiving rent allowance can they simply transfer into another property and so there should be no delay?

    Thanks


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    #2
    edellc
    Closed Accounts Posts: 1,787 ✭✭✭edellc


    If accepting rent allowance is there any paper work on my part to be filled in, apart the PRTB registration?

    Tenant will receive a rent allowance form from the community welfare officer their is a little bit at end you need to fill in ie name your address pps number phone number

    I know rental income is taxable but can it be offset against the mortgage so if really there is no profit than no tax is paid?

    not sure about that one

    Rent allowance tenants are treated no differently from non rent allowance tenants in the sense of lease and deposit and rent paid in advance?

    lease and deposit the same however rent allowance is paid in arrears but if the tenant has the deposit and mths rent in advance then when rent allowance is sorted out they will be paying the rent in advance

    Is there a delay on tenants getting rent allowance, should I expect them to make excuses early in the lease for not having rent or should it be sorted very quickly?

    There is a delay purely due to the paperwork and then the community welfare officer will need to visit the property then they may or may not approve RA also tenant needs to be on housing list in some councils there are a few mths waiting time for just an interview to get on the housing list this is true of south dublin county council :eek: truly shocking
    the council can help however by giving tenant a letter to say they have the meeting and most CWO will accept this therefore approving RA on this basis

    If tenant is currently receiving rent allowance can they simply transfer into another property and so there should be no delay?

    yes they can transfer however most CWO see this as a new claim and the process above needs to be completed so there may be a delay

    when i say delay this should be no more than a few weeks as rent allowance is paid either weekly or on the last thursday of the month through the post office to the tenant, if the tenant is efficient about the paperwork needed then it shouldnt take more than a few weeks


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    #3
    MistyCheese
    Registered Users Posts: 4,005 ✭✭✭MistyCheese


    Hello spindizzy, I'd like to help answer your questions as best I can. I'm not a landlord though so this is from a tenants POV but I'm sure someone who is a landlord will be along to offer their view.
    spindizzy wrote: »
    If accepting rent allowance is there any paper work on my part to be filled in, apart the PRTB registration?

    AFAIK, you will just need to sign one form for your tenant, this will ask questions about the size of the letting (house/flat/bedsit), whether the letting is furnished, how much the rent is and if the deposit has been paid. You need to registered with the PRTB to rent your property regardless of Rent Allowance tenants.
    spindizzy wrote: »
    I know rental income is taxable but can it be offset against the mortgage so if really there is no profit than no tax is paid?

    I can't help you with this one, sorry.
    spindizzy wrote: »
    Rent allowance tenants are treated no differently from non rent allowance tenants in the sense of lease and deposit and rent paid in advance?

    I would agree 100% with this. If a Rent Allowance tenant wants to be treated like everybody else then they bloody well have to behave like everyone else. I would say if a tenant, any tenant, does not have the deposit and one month's rent upfront then don't rent to them. And none of this "my rent allowance is paid in arrears" nonsense. People's salaries are generally paid a month in arrears too. The tenant will have to save up their money until they have enough for one months rent + the deposit just like everybody else has to.
    spindizzy wrote: »
    Is there a delay on tenants getting rent allowance, should I expect them to make excuses early in the lease for not having rent or should it be sorted very quickly?

    I would recommend not signing a lease and handing over keys until you have a deposit. If someone gives you the deposit and a months rent on 1st June that means they have a month to bring the form that you signed for them back to their CWO, set up their Rent Allowance and have the rent for you again on 1st July.

    Rent Allowance is usually set up within a week or two and is backdated so if it took longer than one week the tenant would get two weeks worth on the second week of the month. By the end of the month they will have received four payments.
    spindizzy wrote: »
    If tenant is currently receiving rent allowance can they simply transfer into another property and so there should be no delay?

    Rent Allowance can't be transferred. If a Rent Allowance tenant was to move but remain in the same catchment area (and rent a similar property) then the process can be a bit swifter but if someone moves from one postcode to another then they will have to start from scratch.

    However the process shouldn't take longer than a month, CWOs are aware that people claiming Rent Allowance are going to need to have their claim sorted in time to pay rent and in normal circumstances the claim will be processed within a week or two.

    I hope this has been of some help to you.


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    #4
    the_syco
    Registered Users Posts: 37,299 ✭✭✭✭the_syco


    spindizzy wrote: »
    Rent allowance tenants are treated no differently from non rent allowance tenants in the sense of lease and deposit and rent paid in advance?
    If you allow them in without having to pay deposit or rent, best of luck in getting them out.


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    #5
    athtrasna
    Closed Accounts Posts: 13,420 ✭✭✭✭athtrasna


    spindizzy wrote: »
    Hi,

    I know rental income is taxable but can it be offset against the mortgage so if really there is no profit than no tax is paid?

    Thanks

    That's not how rental income tax is calculated. Firstly you need to be PRTB registered as mentioned, you also need to pay your NPPR charge of €200 per year.

    Income tax is paid on all income less a deduction for allowable expenses (a proportion of Mortgage interest, wear & tear on fixtures and fittings, letting expenses). www.irishlandlords.com is a great resource for first time landlords.


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    #6
    BostonB
    Closed Accounts Posts: 18,056 ✭✭✭✭BostonB


    spindizzy wrote: »
    ...Is there a delay on tenants getting rent allowance, should I expect them to make excuses early in the lease for not having rent or should it be sorted very quickly?...

    Never let a tenant go into arrears. Deposit and a month up front, no exceptions. Check out their references in detail. So many fake ones around. Same rules for all RA or non RA. Any doubts, say no.


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    #7
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    You cannot simply offset rental income against your mortgage.
    75% of the mortgage interest (only the interest component- not the principal) is allowable as an expense before calculation of the taxable income.

    Its entirely possible to have a mortgage of EUR1000 a month, rental income of 800 a month- and still owe tax to the revenue commissioners on the rental income- you need someone who is very familiar with the accountancy rules to go through this with you.


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    #8
    odds_on
    Closed Accounts Posts: 1,869 ✭✭✭odds_on


    Having sorted your financial and tax end of renting a property, you must not forget the laws relating to renting.

    Just for starters, consider the following:

    Do you know the landlords obligations? Found in the Residential Act 2004

    Do you know your Tenants obligations? Found in the Residential Act 2004

    Do you know what the mininum standards of the house are? Found in Rented Property Requirements 2008 and update 2009.

    Have you got a BER certificate for the house?

    Do you know if you will have to register with the PRTB? Depends on how you rent out the property.


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    #9
    spindizzy
    Banned (with Prison Access) Posts: 104 ✭✭spindizzy


    I read on irishlandlord.ie something like... renting a property is a business and so income tax etc must be paid....

    In my case I am only renting as I can't sell, need to move house to work in new part of the country. Is there "other cases" and exceptions to any of the fees or tax etc rules or is it once you rent a property you rent it, end of story.

    I don't want to move out of my house but I have no choice so don't see it as a business! Will I lose the tax relief at source "refund" on my mortgage when I rent out the house?


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    #10
    rcdk1
    Closed Accounts Posts: 558 ✭✭✭rcdk1


    The only exception is where you are living in the house and renting out a room but this doesn't apply to you.

    I would reiterate smccarrick's point that only 75% of the interest paid on your mortgage for the year can be put back against tax and therefore it's likely you will still have to put some of your own money towards the house. You will need to ask your bank to cancel your Tax Relief at Source and issue you with an Interest Cert at the end of the year (which simply states how much interest you paid during the year).

    The Revenue website is a bit hard to navigate at first but has lots of useful information. Here is their "Revenue Guide to Rental Income"

    Despite what people might say, the revenue service are very helpful to people who are genuinely trying to pay their taxes, so don't worry about giving them a call. When all is said and done, they're the only people who can give you definitive answers on your taxes.

    One very important point. It is very unlikely that your current house insurance will cover you if you're renting the house out. Having said that, you only need to cover the house and your own contents, not those of your tenants.


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    #11
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    To be honest- it doesn't matter whether you see it as a business or not- the Revenue Commissioners consider it to be a business- that is what counts.

    There are no short and easy- hand over the keys, get your rent, and don't have to dirty your hands solutions..... You can employ an agent to act on your behalf- however thats going to eat into any rental income, and you would still have to ensure any tenancies were properly registered and make the normal tax returns etc. You can offload the PRTB/BER etc on an agent- however they will charge you handsomely for the duties, and if they screw up- its you who is liable, not they.........

    Its unfortunate that you have to move elsewhere- however if you're going to rent out your property- unfortunately you have to accept the responsibilities that go with this business transaction. Its wholly irrelevant whether its your only property or not- however if you have a mortgage and currently qualify for TRS- you loose this (however 75% of the mortgage interest is currently a tax deductable expense from the gross rental income).

    You seriously need to sit down and go through the implications of this- its not the laissez faire arrangement that might have sufficed years ago- letting property- or renting it- is now a highly regulated industry with significant penalties for failing to comply with any aspects of the regulations...........


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    #12
    odds_on
    Closed Accounts Posts: 1,869 ✭✭✭odds_on


    I read on irishlandlord.ie something like... renting a property is a business and so income tax etc must be paid....

    I think what they mean is that you must consider it a a business project and not go at it in an amateurish way. If you attempt renting out, you must know all the rules and regulations or else it is liable to cost you a lot of money. Not only do you have to know the starting up laws but also when problems arise during the tenancy period. Problems with the property and problems with the tenants and problems at the end of the tenancy.

    Many of these problem areas and are found and covered in the RTA 2004. You must follow the correct process for each problem or else you are usually liable to a fine which for some things may exceed you year's rent (illegal eviction, for example).

    It may not be a bussiness to you but you must consider it as a business.


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