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

pwurple

gaius c wrote: »

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

You mean change it back? Because it has been changed very recently to this bizaar tax system.

Landlords are seen as a soft target for tax hikes because they are the bad guys. And tenants have their heads in the clouds if they think it doesn't trickle right back down to them.

Fact is, what hurts landlord in the pockets, hurts tenants in the pockets.

Remember my simple example above? Mortgage of 750 per month, tiny tracker interest rate. Rent is 850 per month. Tax due per month on that 'income' is around 400.

A landlord with a business hat on looking at this new tax regime will have to charge 1600 for that place to just break even. To make a measly 200 euro for risking his 200k or 300k, he will charge 2000. And that's what we see happening all around us. Pushing up the taxes -> pushes up the rent by a proportional amount, or higher if it causes uncertainty.


I have no idea why some people want to shove up their up own rent by supporting such measures. Seems totally asinine to me.

gaius c

pwurple wrote: »

You mean change it back? Because it has been changed very recently to this bizaar tax system.

Landlords are seen as a soft target for tax hikes because they are the bad guys. And tenants have their heads in the clouds if they think it doesn't trickle right back down to them.

Fact is, what hurts landlord in the pockets, hurts tenants in the pockets.

Remember my simple example above? Mortgage of 750 per month, tiny tracker interest rate. Rent is 850 per month. Tax due per month on that 'income' is around 400.

A landlord with a business hat on looking at this new tax regime will have to charge 1600 for that place to just break even. To make a measly 200 euro for risking his 200k or 300k, he will charge 2000. And that's what we see happening all around us. Pushing up the taxes -> pushes up the rent by a proportional amount, or higher if it causes uncertainty.


I have no idea why some people want to shove up their up own rent by supporting such measures. Seems totally asinine to me.

It's not that bizarre actually. France doesn't allow any mortgage interest as allowable expense for tax purposes. Very few countries allow 100% deductibility. Norway and Netherlands are the only two to my knowledge.

The reason it shouldn't be 100% is that it promotes leverage and increases prices as well as giving investors advantages over PPR buyers in buying up properties. It's also a wealth transfer from non-owners to owners as tenants, for instance, don't get any benefit from the tax break. And it does push up prices.

Now if you were to suggest that these tax advantages were to apply to well-located apartments but not suburban houses, there might be a conversation worth having.

The key problem here is that folk paid too much for their properties. If they didn't pay as much, their "investments" might be able to wash their faces.

relax carry on

Apart from the accidental landlords renting out their former PPR, what about those investors with a few properties where usually one or more will be in a loss position to offset the other taxable properties? What about all those wonderful tax incentive properties which allowed huge losses to accumulate over the years to be offset against taxable income from profitable properties?
I'd love to see exactly how much tax these types of landlords have actually paid in the last 10 years.

handlemaster

relax carry on wrote: »

Apart from the accidental landlords renting out their former PPR, what about those investors with a few properties where usually one or more will be in a loss position to offset the other taxable properties? What about all those wonderful tax incentive properties which allowed huge losses to accumulate over the years to be offset against taxable income from profitable properties?
I'd love to see exactly how much tax these types of landlords have actually paid in the last 10 years.

Id love to see how many tenants would like to be a landlord after knowing all the facts . .. non payment , high tax , damage , void periods etc

relax carry on

handlemaster wrote: »

Id love to see how many tenants would like to be a landlord after knowing all the facts . .. non payment , high tax , damage , void periods etc

I'm not taking away from issues that some landlords have but no business is without risk.
Like any business, investors would have engaged in tax planning to minimise their exposure to tax. That would include purchasing tax incentive properties, interest only loans and offsetting losses. There are landlords who would have paid a lower rate of tax than they would have normally due to tax planning.

handlemaster

relax carry on wrote: »

I'm not taking away from issues that some landlords have but no business is without risk.
Like any business, investors would have engaged in tax planning to minimise their exposure to tax. That would include purchasing tax incentive properties, interest only loans and offsetting losses. There are landlords who would have paid a lower rate of tax than they would have normally due to tax planning.

The tax incentived properties you refer to were priced the normal price plus the tax benefit on top. Thoses who bought these section 23 properties paid over what they were worth other wise . These properties would have been the first in the red . I know ones just like that were sold for 250k now selling for around 50k.

Mr. Incognito

handlemaster wrote: »

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

That is incorrect. Get a better tax accountant or adviser.

http://www.revenue.ie/en/tax/it/leaflets/it70.html

handlemaster

Mr. Incognito wrote: »

That is incorrect. Get a better tax accountant or adviser.

http://www.revenue.ie/en/tax/it/leaflets/it70.html

Ok minus 75% of the interest.

What was been asked was how could a LL not be making money when rent was over mortgage payment

Mr. Incognito

handlemaster wrote: »

Ok minus 75% of the interest.

What was been asked was how could a LL not be making money when rent was over mortgage payment

That's just the mortgage interest.

A hell of a lot of expensese are deductible plus wear and tear which seems to be a big bone of contention between LL and tenants.

You get a tax deduction for wear and tear.

Saying gross rent is taxable is grossly wrong and disingenious.

The problem most LL's in Ireland dont know this is because they are not professional landlords and are ignorant of the basics.

handlemaster

Mr. Incognito wrote: »

That's just the mortgage interest.

A hell of a lot of expensese are deductible plus wear and tear which seems to be a big bone of contention between LL and tenants.

You get a tax deduction for wear and tear.

Saying gross rent is taxable is grossly wrong and disingenious.

The problem most LL's in Ireland dont know this is because they are not professional landlords and are ignorant of the basics.

So a LL makes a capital investment and a portion of it is written off each year.... any what? I was replying to a different post and you picked up on it not understanding what was been replied to. Thats the problem with tenants always knowing what they want to know and not much else.

Mr. Incognito

handlemaster wrote: »

So a LL makes a capital investment and a portion of it is written off each year.... any what? I was replying to a different post and you picked up on it not understanding what was been replied to. Thats the problem with tenants always knowing what they want to know and not much else.

I own my house. I just abhor misinformation.

keane2097

Mr. Incognito wrote: »

I own my house. I just abhor misinformation.

Then I fear you've come to the wrong place!

The_Conductor

Guys- behave. Quite sniping at one another. I'm not going to put another warning up here.