Investors ruining chances for First Time Buyers - regulations?

witchgirl26

Riverireland wrote: »

I'm not talking about landlords but people in ppis who want to move elsewhere. Only own one house which they can't move out of due to the current tax implications. Their other option is to rent a few rooms out and make 12k tax free. They would still be paring property tax so I don't see how that would impact current tax take? They are not going to move out as it stands so they are living in unsuitable accommodation. Should the decide to invest in more than one home the they would no longer be eligible! It would disinsentivise property speculation if anything.

You'd also have to hire people into revenue to police such a scheme which could also have complications. Fully tracking that would need the co-operation of the banks, revenue and a number of others. It wouldn't disincentivise property speculation, it would increase people trying to work around the system.

Riverireland wrote: »

God help the people renting rooms if they can be put out in 24 hours!

Legally they can though. That is the thing. As a rent-a-roomer you do not have any rights as a tenant. Likewise they can up & leave with little or no notice.

Now I'd hope most people would come to an amicable arrangement but still it stands legally.

Riverireland

NewDirection wrote: »

You are suggesting being able to make tax free income from renting a second property up to 12K, if I'm picking you up right? Sure that would attract way more investors than are currently in the market. I'd buy a second property if I could do that. (apologies if I'm picking you up wrong).

Do you mean investing as opposed to speculation on the last line? I fail to see how it disincentives speculation?

No, I'm talking about people who are stuck in a property they bought to live in which no longer suits them. They would rent out their property and rent themselves elsewhere.

Riverireland

witchgirl26 wrote: »

You'd also have to hire people into revenue to police such a scheme which could also have complications. Fully tracking that would need the co-operation of the banks, revenue and a number of others. It wouldn't disincentivise property speculation, it would increase people trying to work around the system.



Legally they can though. That is the thing. As a rent-a-roomer you do not have any rights as a tenant. Likewise they can up & leave with little or no notice.

Now I'd hope most people would come to an amicable arrangement but still it stands legally.

Well I suppose that is looking at the problems it might cause rather than the solutions it might provide. There is no supervision of the rent a room scheme and lots of people using it. The more I think of it renting out rooms is a nice way of getting a pay rise of around 28k if you are on the higher rate of tax.

Villa05

Graham wrote:

I would imagine that has a tiny tiny influence on rental prices and subsequent yields. I'm open to you disproving that with FACTS rather than more anecdotes.

The tax system encourages it. Will a donkey move if you put a carrot in front of it

Graham wrote:

Anything at all to back that up, why would a builder not build when every other post in this thread demonstrates there is more than enough demand?

Common sense. If demand can be filled by repossessions you will be very careful about investing huge amount in building when demand has been filled by repossessions before you finish building

Graham wrote:

Builders are taking into account prices that the market will support, clearly the market is still supporting current prices.

What's the market going to be like when building has finished maybe a year or 2 later

witchgirl26

Riverireland wrote: »

Well I suppose that is looking at the problems it might cause rather than the solutions it might provide. There is no supervision of the rent a room scheme and lots of people using it. The more I think of it renting out rooms is a nice way of getting a pay rise of around 28k if you are on the higher rate of tax.

It's meant to cover all bills so not like you're making a full 12k profit out of it at all.

It is a nice pay rise & way if you have the rooms to rent.

And yes all things should have both the potential solutions it solves for along with problems it creates looked at. Otherwise that would be irresponsible. You have to be able to mitigate the problems otherwise you just have a different set of problems to deal with.

Also with rent a room you are meant to declare the money to the tax authorities and you just won't get charged if it's under the 12k threshold. You are still meant to declare it as income though.

Villa05

Graham wrote:

Newsflash, the 'older generation' are almost always more wealthy as they have been around longer to accumulate such wealth.

Should we have a tax system that benefits them over younger people. Is that the purpose of taxation

witchgirl26

Villa05 wrote: »

Should we have a tax system that benefits them over younger people. Is that the purpose of taxation

Should we have a tax system that cripples a generation who have paid their tax?

Seriously that's just ridiculous. If they are earning money, they will pay the same tax whether they are younger or older. There is no differential based on age.

Graham

Villa05 wrote: »

The tax system encourages it. Will a donkey move if you put a carrot in front of it

By all means argue that pensioners should be subject to the same tax allowances as everyone else that's earning. If you're going to suggest an extra few quid on tax free allowances is skewing the market dramatically in favour of retirees you're going to need to put forward a slightly better argument than donkeys and carrots.

Villa05 wrote: »

Common sense. If demand can be filled by repossessions you will be very careful about investing huge amount in building when demand has been filled by repossessions before you finish building

Demand won't be filled by reposessions, demand will just be shifted elsewhere. Worse than that, supply will be limited as increased numbers of properties lie empty during prolonged court actions. As it stands the market is rising so it's in everyones interest that losses are not crystalised quickly. When I say everyone I of course mean everyone except those hoping to mop up a bargain repo property.

Villa05 wrote: »

What's the market going to be like when building has finished maybe a year or 2 later

In a growing country the building doesn't stop, what makes you think it would?

MouseTail

Its going to take at least 5 years until we have supply to match existing demand, and we have strong population growth projections beyond that. This is a supply issue, anyone who thinks otherwise is fooling themselves.

antoinolachtnai

The real place to focus tax incentives would seem to be on activities which actually create new supply.

Riverireland

MouseTail wrote: »

Its going to take at least 5 years until we have supply to match existing demand, and we have strong population growth projections beyond that. This is a supply issue, anyone who thinks otherwise is fooling themselves.

Absolutely, nobody wants another boom but we will have one. People need to live somewhere and there has been virtually nothing built since 2008. It should have been addressed gradually over the years and because it hasn't been there will have to be major developments at some point to get rid of the backlog.

Graham

Creating additional supply is definitely the answer and I'd say MouseTail is fairly spot on with the 5 year timescale. It's not going to happen overnight and nor should it for fear of overcorrecting too quickly to the disadvantage of anyone that's already bought.

Caliden

antoinolachtnai wrote: »

The real place to focus tax incentives would seem to be on activities which actually create new supply.

Reducing the Vat on construction materials could help.

Someone correct me if I'm wrong but at the moment it's 23%.
http://www.revenue.ie/en/tax/vat/rates/decision-detail-02704.jsp

antoinolachtnai

The VAT can be claimed back by the developer. He charges 13.5 percent on the building AFAIK.

Really what is needed are capital allowances that can be set against income tax for developing suitable accommodation.

Villa05

witchgirl26 wrote:

Seriously that's just ridiculous. If they are earning money, they will pay the same tax whether they are younger or older. There is no differential based on age.

Example posted earlier in thread showing that over 65's pay less tax on the same income when compared to a young couple on the same income. The difference being over 3,500

And please I'm not arguing that over 65's be taxed more. I'm looking for equality and an ending of age discrimination in the tax system

Graham

Villa05 wrote: »

Example posted earlier in thread showing that over 65's pay less tax on the same income when compared to a young couple on the same income. The difference being over 3,500

And please I'm not arguing that over 65's be taxed more. I'm looking for equality and an ending of age discrimination in the tax system

A whole €3500, seriously. That's outrageous. No wonder they're out snapping up properties from under the noses of first time buyers. In todays market that extra €3500 must make a whopping difference.

Just so I'm clear, that means all our silver-haired wiley investors need to do to earn an extra €3500 per year tax free is lock up €300,000+ and take on the hassle of managing a property tenants etc. Talk about easy money.

That's shocking, that's in excess of €100 per month each for a couple. No wonder they're living the high life.

Of course your theory falls completely to pieces if they already have a pension that uses up their tax free allowances.

witchgirl26

Villa05 wrote: »

Example posted earlier in thread showing that over 65's pay less tax on the same income when compared to a young couple on the same income. The difference being over 3,500

And please I'm not arguing that over 65's be taxed more. I'm looking for equality and an ending of age discrimination in the tax system

They get a very small extra tax credit for being over 65 and they are entitled to DIRT back. Also they have an exemption limit of €18,000 for a single & €36,000 for a couple. If they earn below this - no tax.

It's not age discrimination but recognising that generally over 65's have contributed to the tax system for a longer time and that they should be allowed something in return for that. Also that they have increasing costs such as medical ones which they are usually paying out of a pension (which is taxed).

I don't think it's so far unbalanced as to warrant a review of the tax system.

Villa05

Graham wrote:

By all means argue that pensioners should be subject to the same tax allowances as everyone else that's earning. If you're going to suggest an extra few quid on tax free allowances is skewing the market dramatically in favour of retirees you're going to need to put forward a slightly better argument than donkeys and carrots.

Graham wrote:

By all means argue that pensioners should be subject to the same tax allowances as everyone else that's earning. If you're going to suggest an extra few quid on tax free allowances is skewing the market dramatically in favour of retirees you're going to need to put forward a slightly better argument than donkeys and carrots.

Tax free rental income as opposed to a paye worker that may have to pay 50% plus. Hardly an extra few quid

Graham wrote:

Demand won't be filled by reposessions, demand will just be shifted elsewhere. Worse than that, supply will be limited as increased numbers of properties lie empty during prolonged court actions. As it stands the market is rising so it's in everyones interest that losses are not crystalised quickly. When I say everyone I of course mean everyone except those hoping to mop up a bargain repo property.

So builders won't build because there are loads of empties around the place that could hit the market at anytime. Your post screams immaturity in relation to property. In your world once you invest in property, the price must never go down. Free market forces should be suppressed to ensure property never falls.

Graham

Villa05 wrote: »

In your world once you invest in property, the price must never go down. Free market forces should be suppressed to ensure property never falls.

Not at all, in my mind the free market should largely set its own prices with limited government involvement. Hence I don't think the government should do anything to dramatically push the market up or down.

Most countries depend on a certain amount of inflation to keep an economy moving hence prices rise consistently over time. Am I to assume you missed the recent deflationary period completely?

Villa05 wrote: »

So builders won't build because there are loads of empties around the place that could hit the market at anytime.

Of course they will build as long as demand continues in the market. The 'reposessions will fix everything' theory is just not realistic.

I'm not sure how many people need to say this until you believe it. The problem is entirely one of supply not meeting demand, nothing you have suggested comes even close to beginning to address that fundamental. That's probably not what you want to hear while you're mentally picking out carpets and soft furnishing but there it is.

NewDirection

Villa05 wrote: »

Tax free rental income as opposed to a paye worker that may have to pay 50% plus. Hardly an extra few quid

The retiree can only have tax free income if their income is 18,000 between their state pension and their rental income.

The PAYE worker only has to pay 50% plus if they are already in the higher tax bracket.

This is not a like for like scenario.

Villa05

NewDirection wrote:

The retiree can only have tax free income if their income is 18,000 between their state pension and their rental income.

My example referred to a couple where this rises to 36k

Graham wrote:

Of course they will build as long as demand continues in the market. The 'reposessions will fix everything' theory is just not realistic.

There has been supply issues for 3 years now. Planning applications are falling. So plenty demand but no one is building. It should have at least started by now

Lack of action on repossessions is preventing both immediate supply and new supply. Would you invest a huge amount of money on building new houses when there are 40k houses 2 years or more in arrears. That is far too much and will always be huge risk to your investment were they to hit the market.

3,600 is a lot of money for someone on 36k add a medical card and it rises to close to 5000 as there would be USC savings also.

Villa05

NewDirection wrote:

This is not a like for like scenario.

Have a fixed tax on rental income, can't get more like for like than that. This is the point I'm arguing

Villa05

Graham wrote:

That's probably not what you want to hear while you're mentally picking out carpets and soft furnishing but there it is.

I'm not an ftb. More like you I want a market that functions properly and free from interference or vote buying which a lot of the polices are

Villa05

Graham wrote:

Most countries depend on a certain amount of inflation to keep an economy moving hence prices rise consistently over time. Am I to assume you missed the recent deflationary period completely?

The deflation was a correction after 300% inflation over the previous 10 years. Consistent indeed 20 odd %

Graham

Villa05 wrote: »

The deflation was a correction after 300% inflation over the previous 10 years. Consistent indeed 20 odd %

and now it has ended for the most part.

Villa05

witchgirl26 wrote:

It's not age discrimination but recognising that generally over 65's have contributed to the tax system for a longer time and that they should be allowed something in return for that. Also that they have increasing costs such as medical ones which they are usually paying out of a pension (which is taxed).

I'm all for rewarding older people, That is why I would object if the contributory pension was cut or medical card. I would consider myself to be lucky if these benefits remain when I reach that age.
However these tax credits are dangerous for over 65's. They encourage property purchase to supplement income to use up these tax credits. Property is a long term investment not not appropriate for over 65's
Younger couples have much greater expenses to over 65's housing, education , childcare, health care,

Graham

Villa05 wrote: »

I'm all for rewarding older people, That is why I would object if the contributory pension was cut or medical card. I would consider myself to be lucky if these benefits remain when I reach that age.
However these tax credits are dangerous for over 65's. They encourage property purchase to supplement income to use up these tax credits. Property is a long term investment not not appropriate for over 65's
Younger couples have much greater expenses to over 65's housing, education , childcare, health care,

You are still ignoring the fact that most pensioners already have an income so this great tax benefit you keep referring back to doesn't exist.

Even if it did exist as the pensioner had no other income it would equate to just over €100 per month. Your position that this €100 per month is sufficient to sway the property market is quite frankly absurd.

Villa05

Graham wrote:

You are still ignoring the fact that most pensioners already have an income so this great tax benefit you keep referring back to doesn't exist.

Have you data to back that up. Income outside the state pension I mean

Graham

Villa05 wrote: »

Have you data to back that up. Income outside the state pension I mean

I'm not the one asserting that hoardes of pensioners are roaming the country snapping up property.

How does that work, collect pension on Thursday, bit of shopping in M & S in the morning, lunch in Kylemore than snap up a couple of apartments in the afternoon before heading to bingo.

Are you seriously suggesting that there's a large proportion of the retired population surviving solely on a state pension that are building a property empire on the side?

Villa05

Graham wrote:

Even if it did exist as the pensioner had no other income it would equate to just over €100 per month. Your position that this €100 per month is sufficient to sway the property market is quite frankly absurd.

3600 is 300 per month 400 if couple have a medical card
The extra income is 16000 per year over and above the state pension. The 3,600 is the tax/prsi savings

To say it is 100 per month is wrong and highly misleading