The cost of being a landlord - who would want to be one?

gaius c

handlemaster wrote: »

http://m.independent.ie/opinion/columnists/miriam-donohoe/allowing-landlords-some-tax-reliefs-would-go-some-way-to-help-ease-housing-crisis-34189124.html

Not very detailed but interesting article none the less on been a landlord...most LL I would say would leave it at his stage if all costs were covered. Certainly the accidental anyhow

Landlords want the tax system changed to suit themselves? It's not a great surprise. Tax has always been chargeable on the full income and not the profit.

If a landlord can't make money at a time of record rents, they need to question their own business acumen, not the tax system that's always been like this.

Gumbo

gaius c wrote: »

.

If a landlord can't make money at a time of record rents, they need to question their own business acumen, not the tax system that's always been like this.

So you want rents increased?
Even with tenants paying above and beyond the cost of the mortgage, the LL will still see no profit.

Currently, if you break even its win win situation.

gaius c

kceire wrote: »

So you want rents increased?
Even with tenants paying above and beyond the cost of the mortgage, the LL will still see no profit.

Currently, if you break even its win win situation.

Don't put words in my mouth please.

Gumbo

gaius c wrote: »

Don't put words in my mouth please.

You said of a LL can't make a profit during high rents then there's something wrong. I've shown even with above and beyond rental income, there is no profit, thus, rental income should increase.

ComfortKid

kceire wrote:

So you want rents increased? Even with tenants paying above and beyond the cost of the mortgage, the LL will still see no profit.

Can you explain this for me please.

If you are receiving rent higher than what you're paying on the mortgage, then how are you not making profit?

handlemaster

ComfortKid wrote: »

Can you explain this for me please.

If you are receiving rent higher than what you're paying on the mortgage, then how are you not making profit?

Tax is paid on gross rent . Not rent minus mortgage payments.

4ensic15

ComfortKid wrote: »

Can you explain this for me please.

If you are receiving rent higher than what you're paying on the mortgage, then how are you not making profit?

Due to taxes and non-deductible overheads.

handlemaster

gaius c wrote: »

Landlords want the tax system changed to suit themselves? It's not a great surprise. Tax has always been chargeable on the full income and not the profit.

If a landlord can't make money at a time of record rents, they need to question their own business acumen, not the tax system that's always been like this.

Unfortunately having that attitude only makes rents go higher. The government dont care about landlords its not a vote winner but investors are selling up so in thé end the tenant will pay more

4ensic15

gaius c wrote: »

Landlords want the tax system changed to suit themselves? It's not a great surprise. Tax has always been chargeable on the full income and not the profit.

If a landlord can't make money at a time of record rents, they need to question their own business acumen, not the tax system that's always been like this.

Tax has not always been chargeable on the full income and not the profit. How could anyone sell petrol on a margin of 6% at that rate? Buy 50lk worth of petrol, get 53k in the till and pay tax on an income of 53k? The mind boggles.

LeBash

borderlinemeath wrote:

Basically all profit? Are you for real? Do you think Revenue let you keep all the rent? Do you think that there's no CGT owed when you go to sell the house?

Most ill informed statement I've seen here by a landlord basher in a while!!

I assume most landlords are in it for the love of it. I've been in other peoples places smaller than my kitchen which isn't big and it costs 600 a month. Small bungalows broken into 3 or 4 flats netting the land load 2-2.5 k per month. Probably 4 times the mortgage if they still had one.

I've rarely seen a proper fire alarm system, always corners cut. Some places don't even have an intercom.

I have seen landlords fix coin meter to give people 50% of the electricity they have paid for.

I am yet to see a landlord with a few property's struggle financially.

While it can be a taxing job fixing up places landlords are very well rewarded.

handlemaster

LeBash wrote: »

I assume most landlords are in it for the love of it. I've been in other peoples places smaller than my kitchen which isn't big and it costs 600 a month. Small bungalows broken into 3 or 4 flats netting the land load 2-2.5 k per month. Probably 4 times the mortgage if they still had one.

I've rarely seen a proper fire alarm system, always corners cut. Some places don't even have an intercom.

I have seen landlords fix coin meter to give people 50% of the electricity they have paid for.

I am yet to see a landlord with a few property's struggle financially.

While it can be a taxing job fixing up places landlords are very well rewarded.

Why dont you buy a place and rent it out ? Sounds like a réal money maker

timmyntc

lima wrote: »

Now I don't really look at many other threads on boards, but I feel that Landlords are very, very moany.

I don't hear as much moaning from taxi drivers, shop owners, start-up owners etc.

If a landlord moans that much then maybe they should move on and not be a landlord. With all your complaining about tax, did you not do the math to see if it was a viable 'business'?

Also, I personally moaned about renting. But then I purchased an apartment so I done something about it

Fun fact: you dont actually buy an apartment - you get a long term lease of anything from 90 to 999 years. Technically you are still renting so to speak.

tuisginideach

Simple - we pay taxes on our rental income, LPT, building insurance etc and we pay the PRTB (to do nothing for us) ... and we repair/replace the washing machine (that breaks five times more often than the same make I have at home, used for more people) and the toaster and the microwave that they burnt out and the carpet which has far more than normal wear and tear but they will argue that they didn't spill the coffee etc on it/ the fireguard moved out of the way just as the spark was flying out to burn the carpet etc etc etc

borderlinemeath

LeBash wrote: »

I assume most landlords are in it for the love of it. I've been in other peoples places smaller than my kitchen which isn't big and it costs 600 a month. Small bungalows broken into 3 or 4 flats netting the land load 2-2.5 k per month. Probably 4 times the mortgage if they still had one.

I've rarely seen a proper fire alarm system, always corners cut. Some places don't even have an intercom.

I have seen landlords fix coin meter to give people 50% of the electricity they have paid for.

I am yet to see a landlord with a few property's struggle financially.

While it can be a taxing job fixing up places landlords are very well rewarded.

So by your anecdotal evidence you appear to know the financial details of all landlords that let out to other people. :rolleyes:

Gumbo

ComfortKid wrote: »

Can you explain this for me please.

If you are receiving rent higher than what you're paying on the mortgage, then how are you not making profit?

I'm earning good on my property. I earn €400 per month more than what the mortgage is. But after paying out associated costs and keeping the place in good condition (yes I do look after the property and the tenants btw) and tax based on the full amount it's just about breaking even.

I'm not complaining mind you, it's a long term investment and I went into it eyes open.

LeBash wrote: »

I assume most landlords are in it for the love of it. I've been in other peoples places smaller than my kitchen which isn't big and it costs 600 a month. Small bungalows broken into 3 or 4 flats netting the land load 2-2.5 k per month. Probably 4 times the mortgage if they still had one.

I've rarely seen a proper fire alarm system, always corners cut. Some places don't even have an intercom.

I have seen landlords fix coin meter to give people 50% of the electricity they have paid for.

I am yet to see a landlord with a few property's struggle financially.

While it can be a taxing job fixing up places landlords are very well rewarded.

What you are describing is against the law at so many levels. You could call your local council building control department, fire prevention and I guarantee action will be taken. Any building with flats etc have to comply with the fire services act 1981 and the ease of escape regulations at a minimum.

ComfortKid

kceire wrote:

I'm earning good on my property. I earn €400 per month more than what the mortgage is. But after paying out associated costs and keeping the place in good condition (yes I do look after the property and the tenants btw) and tax based on the full amount it's just about breaking even.

Thank you for the decent answer. There must be some dodgy tennants out there because I am renting three years now and I only ever had to ring the landlord once for a loan of a ladder to clean the gutters..

If tennants are costing ye money on a lot of repairs ect, throw them out. Plenty decent people desperate for a house I'd imagine.

ComfortKid

I should add that my landlord is decent too. Hasn't ever needed to call me and he has never increased the rent, so I'm renting well below the market value.

borderlinemeath

ComfortKid wrote: »

Thank you for the decent answer. There must be some dodgy tennants out there because I am renting three years now and I only ever had to ring the landlord once for a loan of a ladder to clean the gutters..

If tennants are costing ye money on a lot of repairs ect, throw them out. Plenty decent people desperate for a house I'd imagine.

This is the problem. Tenants that cause undue damage, conduct anti-social behaviour or refuse to pay rent are very very difficult to just "throw out". Tenants have far more rights than the "greedy landlords". They can destroy your investment and leave you in huge debt without any consequence.

Gumbo

ComfortKid wrote: »

Thank you for the decent answer. There must be some dodgy tennants out there because I am renting three years now and I only ever had to ring the landlord once for a loan of a ladder to clean the gutters..

If tennants are costing ye money on a lot of repairs ect, throw them out. Plenty decent people desperate for a house I'd imagine.

I've a great tennant tbh and the costs are statutory costs, nothing to do with the tenants to be fair. I pay to have the gutters done, external Windows and the driveway done because I want the house to be kept in good order as its in a quite closed little estate.

Only one call this year and that was when the washing machine stopped draining which was quickly sorted out as its under warranty at zero cost to myself, in fact the tennant herself gave her number to the supplier and dealt with them directly so I didn't even have to set foot in the house.

Even if the house cost nothing over a year to run, my profit on paper is rent minus mortgage of approx €4800 per year. But you pay the tax on everything you earn minus 75% of the interest portion of the mortgage so my tax bill is approx €3700 give or take. But then you still have to pay LPT, mortgage protection, landlord insurance etc so essentially no profit at the end so to speak.

But as I mentioned already, you won't find me complaining if I break even as its my investment for the future not income.

ComfortKid

I do find that part unfair on landlords, it's their house and they should be able to physicaly throw someone out the door if the tennant isn't paying and wont move out after the proper eviction procedures

handlemaster

ComfortKid wrote: »

Thank you for the decent answer. There must be some dodgy tennants out there because I am renting three years now and I only ever had to ring the landlord once for a loan of a ladder to clean the gutters..

If tennants are costing ye money on a lot of repairs ect, throw them out. Plenty decent people desperate for a house I'd imagine.

You cant just get rid of a tenant even if they reck the place or dont pay a cent . A tenant could be in a property for two years without paying anything . Thats the issue.

Plus the high tax

The_Conductor

ComfortKid wrote: »

I do find that part unfair on landlords, it's their house and they should be able to physicaly throw someone out the door if the tennant isn't paying and wont move out after the proper eviction procedures

The proper eviction procedures- themselves- can take a year or more.
A landlord has to lodge a case with the PRTB and await a hearing date (which takes months at best- and was regularly taking 18 months + up to recently (its gotten a bit better- but is still unsatisfactory)). You can't apply to a court to evict a non-paying tenant. After the PRTB determination- you then have to apply to a court to enforce the determination (on average another 7-8 weeks). After this- if the tenant is still gaming the system- as tends to happen- you have to apply to have them formally evicted. Its far from unusual for all of this to take up to 2 years- all throughout which the landlord is incurring expenses, mortgage payments, management charges, property tax, prtb fees etc- against which they have no income- and its also not terribly unusual for landlords to fall behind in mortgage payments and ultimately loose the property- so even when they do eventually get it back- they have to sell it (and thats after they have repaired any damage the overstaying tenant has caused).

pwurple

I don't think people realise how much of the rent goes to the govt.

Say I have a place with a mortgage of 750 per month, tiny tracker interest rate. Rent is 850 per month. Tax due per month on that 'income' is around 400.

The_Conductor

pwurple wrote: »

I don't think people realise how much of the rent goes to the govt.

It suits Alan Kelly and the rest of the government- to obfuscate this salient point. Its quite normal for the government to get over half of rental income- yet, whenever the media launch another attack on greedy landlords- Alan Kelly et al. are right there on the sidelines cheering them on........ In this instance- the government really do manage to get their cake and eat it..........

gaius c

4ensic15 wrote: »

Tax has not always been chargeable on the full income and not the profit. How could anyone sell petrol on a margin of 6% at that rate? Buy 50lk worth of petrol, get 53k in the till and pay tax on an income of 53k? The mind boggles.

Run it as a proper business then. Form a company. Landlords are trying to have their cake and eat it too.
The interest rate relief was only added in to fuel the property market further and it was removed because it was encouraging over-leverage.

gaius c

handlemaster wrote: »

Unfortunately having that attitude only makes rents go higher. The government dont care about landlords its not a vote winner but investors are selling up so in thé end the tenant will pay more

You started a thread on this and it was debunked in the first post.

handlemaster

gaius c wrote: »

You started a thread on this and it was debunked in the first post.

no it wasn't

Gumbo

gaius c wrote: »

Run it as a proper business then. Form a company. Landlords are trying to have their cake and eat it too.
The interest rate relief was only added in to fuel the property market further and it was removed because it was encouraging over-leverage.

But to run it like a proper business then the government has to allow proper expenses and tax write off similar to small enterprise or self employed.

You can't tell people to run something like a business but not provide the same back ups that small business gets from the tax system.

riclad

IF you have one tenant ,the revenue treats you as someone who runs a business .
WE need 1000,s more landlords .
The present tax system does not encourage someone to be a landlord .
Say you buy a 150k apartment in dublin to rent out , i dont think you could
make any significant profit .
A loan of 150k costs at least 300k to pay back over 25 years,
if interest rates were never TO Increase at for 25 years .
Other business,es get tax credits for all expense,s rent,insurance etc
Maybe the tax system worked when you could buy a house for 50k.
The law allows a tenant to stay in a flat for a long time without paying rent .
So the whole system we have now needs changing updating to encourage
people to become landlords.
Or to encourage companys to buy up property to rent.

gaius c

kceire wrote: »

But to run it like a proper business then the government has to allow proper expenses and tax write off similar to small enterprise or self employed.

You can't tell people to run something like a business but not provide the same back ups that small business gets from the tax system.

Register a company but that means you have to pay corporation tax and then tax at the marginal rate (probably) for any income you pay yourself after that. Do proper accounts as well. Yeah, I can see why landlords don't want to do it.

Sorry guys. I don't see why we've to change the tax system to help landlords who made bad investments.

The reality is that allowing 100% of the interest as a business expense for small-time landlords encourages leverage and as we've learned in the last number of years, leverage is dangerous if abused.