Why a rental crisis now?

keane2097

If you are a landlord - especially if you are an 'accidental' one - you might be surprised at the variety expenses you can claim back if you are not doing so already.

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"We deal with landlords every year who, before they approach us, are unaware of the list of items that are tax deductible," said Barry Flanagan, tax expert at taxback.com.

The main ones are:

maintenance of the property - in other words. repairs, cleaning, decorating and painting
insurance of the premises
management fees
accounting fees
advertising costs
legal fees for drafting up leases, &
mortgage interest (only 75pc allowable for residential properties)

http://www.independent.ie/business/personal-finance/property-mortgages/what-you-can-claim-as-landlord-expenses-31317439.html

Has the above changed or are people using regular business information for landlords just clueless?

L1011

keane2097 wrote: »

http://www.independent.ie/business/personal-finance/property-mortgages/what-you-can-claim-as-landlord-expenses-31317439.html

Has the above changed or are people using regular business information for landlords just clueless?

That is the info correct for an individual renting out

In the case of an actual registered business renting out, they have a completely different taxation system.

4ensic15

L1011 wrote: »

That is the info correct for an individual renting out

In the case of an actual registered business renting out, they have a completely different taxation system.

What do you mean by an "actual registered business". A business can't be registered. A business name can be registered. If a business name is registered by an individual, that individual is taxed the same regardless.

The_Conductor

4ensic15 wrote: »

What do you mean by an "actual registered business". A business can't be registered. A business name can be registered. If a business name is registered by an individual, that individual is taxed the same regardless.

He means a business as a company- which is a legal entity in its own right. A landlord letting a property- is running a business, they are not however running a company- nor or are they governed by company law. They could however form a company- and let a property or multiple properties, via the company- which would change the rules that apply (and indeed the tax regime under which they are operating).

JustTheOne

http://www.irishexaminer.com/ireland/2000-offers-of-social-housing-turned-down-362579.html

2,000 council houses turned down in last year.

Might explain why some people find themselves in hotels.

Disgraceful.

4ensic15

The_Conductor wrote: »

He means a business as a company- which is a legal entity in its own right. A landlord letting a property- is running a business, they are not however running a company- nor or are they governed by company law. They could however form a company- and let a property or multiple properties, via the company- which would change the rules that apply (and indeed the tax regime under which they are operating).

A company can be registered, but it is the company which is registered, not the business. A partnership can run a business and the tax rules which apply are different to individuals and companies.
Partnerships can also be registered so why are they not contained within the definition of "actual registered business".

The_Conductor wrote: »

A landlord letting a property- is running a business, they are not however running a company

A company can be a landlord. Does it run itself?
An individual can register a business name and rent out a under the style of the business name.

Slydice

JustTheOne wrote: »

http://www.irishexaminer.com/ireland/2000-offers-of-social-housing-turned-down-362579.html

2,000 council houses turned down in last year.

I added a chart to the thread discussing that:

L1011

4ensic15 wrote: »

What do you mean by an "actual registered business". A business can't be registered. A business name can be registered. If a business name is registered by an individual, that individual is taxed the same regardless.

Limited (or Unlimited, although those are rather rare) Company.


There are hundreds or thousands of apartments in Dublin owned by companies and let out - these have all the tax benefits that apply. Kennedy Wilson would be a major one.

The_Conductor

4ensic15 wrote: »

A company can be registered, but it is the company which is registered, not the business. A partnership can run a business and the tax rules which apply are different to individuals and companies.
Partnerships can also be registered so why are they not contained within the definition of "actual registered business".

A company can be a landlord. Does it run itself?
An individual can register a business name and rent out a under the style of the business name.

You're being pedantic.
You know very well what was intended in the previous posts.
Keep ontopic.

FrStone

Joe Late Notch wrote: »

Yes you can.

http://www.revenue.ie/en/business/running/allowable-expenses.html

5th bullet point: Interest paid on any monies borrowed to finance business expenses/items

There is also capital allowances. A significant amount can be written off against tax with capital allowances.

If as a landlord you borrowed money to buy say a couch then the interest would be allowable. This is the type of borrowing reffered to above.

However if a businees borrows money to buy an office the loan interest on that is not allowable.

You are correct the only time loan interest on the purchase of a building would be allowable for a business is if the building is classed as an Industrial Building (which a resedential property is not).

L1011

FrStone wrote: »

If as a landlord you borrowed money to buy say a couch then the interest would be allowable. This is the type of borrowing reffered to above.

However if a businees borrows money to buy an office the loan interest on that is not allowable.

You are correct the only time loan interest on the purchase of a building would be allowable for a business is if the building is classed as an Industrial Building (which a resedential property is not).

You really haven't got a clue.

Landlords (private landlords) cannot offset interest on anything other than the mortgage on the property, at 75%, against earnings

A corporate landlord, even of residential properties, can offset all relevant interest against corporation tax.

I really hope you have nothing to do with accounts for anyone, private or corporate.

Idbatterim

NAMA's job is to sell the houses and get money back. Giving them away doesn't get the money back. And buying from Peter to give money Paul won't help.

yes their job is to maximise return, why in gods name sell them off then, when the economy was in the sh**ter?! ok things turned around quicker than I expected, but it was obvious some of the stuff was laughably undervalued in my opinion, of course people will say that was the value at the time, if there was a fair auction process...

THE chairman of NAMA has defended the agency's sale of the Battersea power station site in London against claims it should have held out for a higher price.


It follows claims that taxpayers here may have lost out on hundreds of millions of euro because of the timing of a 2012 sale by NAMA of loans secured on the site, which has planning permission for London's biggest property development.

The disposal was described by Kevin McCauley, senior director of research and consulting at CBRE in London, as "the deal of the century", for Malaysian buyer SP Setia.

"We didn't sell early, we sold at the right time," Frank Daly, chairman of NAMA, said.

"We sold that loan for £500m (€600m). So we got back the full value of the loan."

L1011

Idbatterim wrote: »

yes their job is to maximise return, why in gods name sell them off then, when the economy was in the sh**ter?! ok things turned around quicker than I expected, but it was obvious some of the stuff was laughably undervalued in my opinion, of course people will say that was the value at the time, if there was a fair auction process...

People were complaining at the time that NAMA was keeping house prices artificially high by *not* selling.

The two viewpoints don't match.

quadrifoglio verde

Idbatterim wrote: »

yes their job is to maximise return, why in gods name sell them off then, when the economy was in the sh**ter?! ok things turned around quicker than I expected, but it was obvious some of the stuff was laughably undervalued in my opinion, of course people will say that was the value at the time, if there was a fair auction process...

Because the country needed the money.
We couldn't afford to pay teachers and nurses let alone high profile people working for nama.
My understanding of nama is that it's been pretty self financing
Also if all those non performing loans remained on namas books, how would they have affected
A) Irish property prices
Irish borrowing rates

It was never the idea for nama to be a long term asset management company but for the orderly wind down of non debts associated with what was perceived as very risky assets.

The_Conductor

L1011 wrote: »

People were complaining at the time that NAMA was keeping house prices artificially high by *not* selling.

The two viewpoints don't match.

The particular loan- was for the old Battersea power station in London- which had planning permission for thousands of residences, office space and commercial units. NAMA bought the loan @ 50% discount @ 500 million- and got their money back on it. They did not want to borrow several billion more to develop the site- which they would have had to do- if they wished to develop it themselves. The Malaysians did get the deal of the century on the site- but NAMA got to cash out- at a time when vultures imagined they'd get assets at cents in the Euro off NAMA.

It was a bad time- and at the time- it probably was the best NAMA could do.

In retrospect- of course they should have held onto it- but isn't hindsight a wonderful thing.

If we're going to beat up NAMA over anything- how about pick its refusal to answer FOI requests, its refusal to answer to the Public Expenditure Committee, its pay-offs and redundancy packages that would make the private sector cringe- never mind the public sector- who have never seen the likes etc etc etc

NAMA are winding themselves down early- well done to them- how and ever- it is not in their remit to become a long term landlord here- to satisfy the governments lack of investment in social housing- and our homeless crisis. If the government want a scapegoat to hang this mantle on- they should pick a different agency.

handlemaster

There were alot of people à few years back saying NAMA s over hang of properties would keep prices low as people would wait for them to be sold. Anybody still believe this ?

CramCycle

handlemaster wrote: »

There were alot of people à few years back saying NAMA s over hang of properties would keep prices low as people would wait for them to be sold. Anybody still believe this ?

I remember people saying the opposite. Saying that the hold back was causing artificially high rents and property prices. Suppose it depends who you talk too.

Villa05

handlemaster wrote:

There were alot of people à few years back saying NAMA s over hang of properties would keep prices low as people would wait for them to be sold. Anybody still believe this ?

NAMA together with the banks reluctance to deal with mortgage arrears will result in a choke on supply as nobody will build with this overhang of property yet to be offloaded to someone who is actually willing to pay for it.

Johnner101

JustTheOne wrote: »

There is 1000s of properties available down the country but as I said people wont move out of Dublin.

some people are trying to get back on their feet

What are they going to do down the back arse of nowhere with no chance of employment at all

Johnner101

Johnner101 wrote: »

some people are trying to get back on their feet

What are they going to do down the back arse of nowhere with no chance of employment at all

There are not all in the back arse of nowhere. There are lots within 30 mins commute of cities or big towns which do have employment, and people getting housed are not going to be looking for any sort of skilled employment so every town will have some jobs.

To be honest I'd prefer people weren't moved down the country though as it may well bring crime and anti-social behaviour to otherwise nice quiet areas.

JustTheOne

Johnner101 wrote: »

some people are trying to get back on their feet

What are they going to do down the back arse of nowhere with no chance of employment at all

And some people aren't and are too fussy.

L1011

http://www.irishtimes.com/news/politics/rents-to-only-be-increased-every-two-years-under-housing-plan-1.2419019

I'm not sure any of these proposals are going to do much. 100% of mortgage interest allowed but only to socially supported tenants and only if you lock prices for 3 years won't get many takers, 24 month rent review periods won't encourage more landlords to enter the market, removing development levies will likely end up being regretted in future (and 300k is still quite dear to take as an idea of a 'cheap' unit) and so on.

Its more than the government has done in the past ten years to at least try, though. Could be completely pointless though.

quadrifoglio verde

L1011 wrote: »

http://www.irishtimes.com/news/politics/rents-to-only-be-increased-every-two-years-under-housing-plan-1.2419019

I'm not sure any of these proposals are going to do much. 100% of mortgage interest allowed but only to socially supported tenants and only if you lock prices for 3 years won't get many takers, 24 month rent review periods won't encourage more landlords to enter the market, removing development levies will likely end up being regretted in future (and 300k is still quite dear to take as an idea of a 'cheap' unit) and so on.

Its more than the government has done in the past ten years to at least try, though. Could be completely pointless though.

Rents will rise in the next two months at an unprecedented amount as a result of this. Landlords who ave good tenants who haven't increased the rent in the last 12 months will undoubtedly do so now, knowing that the rent can't be touched until November 2017

Marcusm

L1011 wrote: »

You really haven't got a clue.

Landlords (private landlords) cannot offset interest on anything other than the mortgage on the property, at 75%, against earnings

A corporate landlord, even of residential properties, can offset all relevant interest against corporation tax.

I really hope you have nothing to do with accounts for anyone, private or corporate.

I think you might need to consider this again; a company letting property and in receipt of Sch D Case V income subject to corporation tax is subject to the same computational provisions as an individual. This means that it is entitled to relief for interest on money borrowed for the purpose of the purchase, repair or improvement of the property but is still subject to the s97(2)(j) restriction to 75% of the interest costs arising in respect of residential property. No distinction is made between income tax and corporation tax for this purpose.

Darkest Horse

quadrifoglio verde wrote: »

Rents will rise in the next two months at an unprecedented amount as a result of this. Landlords who ave good tenants who haven't increased the rent in the last 12 months will undoubtedly do so now, knowing that the rent can't be touched until November 2017

And beyond that also. I'm a landlord who has been charging my tenant well below market rate on a one bed apartment for almost a decade now. I increased it for the first time ever this year in line with a change in my borrowing circumstances, but still 15% below advertised rates. Another increase was due this January, which now has to be delayed for a year but come January 2017, if the market allows (and it probably will given that rents will spike right now and supply issues won't be ironed out for some time), I'll just adjust the rent to account for 2016s deficit. Ultimately, there's no net gain for the tenant, just a higher increase when the time comes (still at market rate I'll add).

godtabh

So this will be announced today.

http://www.breakingnews.ie/ireland/government-plan-to-tackle-rent-increases-agreed-704250.html

Looks like I have to give notice to my current tenants that rent is going up. I've no choice now because who knows what will happen in 2 years time. I also wont be renewing their lease when it is up again. Will only be offering 12 month lease going forward.

_Kaiser_

godtabh wrote: »

So this will be announced today.

http://www.breakingnews.ie/ireland/government-plan-to-tackle-rent-increases-agreed-704250.html

Looks like I have to give notice to my current tenants that rent is going up. I've no choice now because who knows what will happen in 2 years time. I also wont be renewing their lease when it is up again. Will only be offering 12 month lease going forward.

As usual another bodge by the current Government that will only make the situation worse if the initial reactions here and elsewhere are any indication

But if your tenants have part 4 rights then they won't be obliged to sign a new lease when the current agreement expires anyway? Or has that been changed?

_Kaiser_

quadrifoglio verde wrote: »

Rents will rise in the next two months at an unprecedented amount as a result of this. Landlords who ave good tenants who haven't increased the rent in the last 12 months will undoubtedly do so now, knowing that the rent can't be touched until November 2017

But that'll only work if a rent increase is due, no? They can't decide to just hike the rent now if it's already been done in the last 12 months.

What will happen though is when rent reviews are due, they'll be increased to cover 24 months (or more) rather than 12. Even if the review isn't until 2016 say and the new measures are in force by then, enough landlords will have done so beforehand that the "market rate" will have jumped significantly in the interim.

Unless I'm missing something this measure will only make the situation worse for tenants?

handlemaster

Landlords would be well advised to increase to the market rate now before its to late. Again there will be no thanks for charging below market rate. The government are determined to screw the landlord to appease the public.

Victor

bigpink wrote: »

Why a rental crisis now?

8 years of little construction, expanding population and now an increase in take-home pay, so more household formations - people can afford to no longer live with mammy / can't hack the commute.

bigpink wrote: »

People couldnt rent out places 3 years ago

Not quite. 3 years ago, people had to go looking to find available stock.