Proposal for landlord tax break in budget

https://www.boards.ie/discussion/comment/120486712#Comment_120486712

In what way can landlords legally work the tax system in their favor? The tax code is fairly well defined at this stage I would have thought.

There are three main stumbling blocks to small landlords remaining or returning to the rental market. Without small landlords we are heading towards a greater shortage of rental properties and a smaller number of individuals owning the majority of rental properties neither of which will be good for renters long term.

1. The initial cost, property costs so much now that there are few that can afford to get involved or keep an existing property when trying to finance a larger property for themselves to live in.
2. The amount of return the landlord makes vs the amount of effort/risk required is too low to make becoming a landlord an attractive long term investment.
3. The legislation has become biased against landlords making it difficult to run rentals in the same manner as any other business

spaceHopper

https://www.boards.ie/discussion/comment/120487220#Comment_120487220

Offset mortgage interest against tax. (still have to cover capital repayments), set it up as part of their pensions. write off cost of furniture, insurance, maintenance. When they retire their PAYE income stops but they still have allowances.

antoinolachtnai

https://www.boards.ie/discussion/comment/120488365#Comment_120488365

For a retired landlord renting an apartment for 13000 a year (capped by ROZ) and paying 3000 between service charge and maintenance, €5000 per year after tax isn’t really enough for it to be worth keeping a €200,000 asset. The interest break doesn’t matter if the capital is paid off. A capital gains break doesn’t mean much if the apartment is worth less than what it cost in 2005 as is the case for many s23 properties.

DFB-D

https://www.boards.ie/discussion/comment/120488879#Comment_120488879

Just a point, many retired people rely on property to earn income taxed at 20% that they wouldn't have from their pension especially as we are outliving the private pension benefits.

In that regard property rental is attractive, but the entry costs and rents vs average salaries are too high at the moment so people (including myself) are holding off to see if a correction is coming.

https://www.boards.ie/discussion/comment/120488365#Comment_120488365

I wouldn't consider that working the system.

DownByTheGarden

https://www.boards.ie/discussion/comment/120490313#Comment_120490313

Not to mention the outrageous risk/reward ration that exists now.

Becoming a landlord in Ireland now would be like volunteering to pick up the soap in the prison shower.

spaceHopper

https://www.boards.ie/discussion/comment/120488879#Comment_120488879

So the problems is that the RPZ cap is hammering them, not tax, even if they paid no tax that is to low a return. They should be getting 1800 x 12 so 21600. Still it's a very low return. However what equivalent pension would they need to get that kind of income.

antoinolachtnai

Well it’s the whole lot together. If the tax was lower the RPZ wouldn’t be such and issue. But there is not much money in being a landlord in an RPZ as it is, if you follow the rules.

You can’t really compare it to a pension annuity. The risk and management is completely different.

Any retiree who is in the 20 percent bracket shouldn’t really be involved in rental property. It’s just too risky and capital intensive for people on relatively low incomes.

DFB-D

https://www.boards.ie/discussion/comment/120490843#Comment_120490843

I disagree, there are advantages to having assets which generate income along with pension, one being diversification of pension risk.

A married couple can earn 80k severally at 20% so it makes sense to max that out over their life and funding pensions to deliver what ever the 40k single limit will be in 20 years is challenging.

antoinolachtnai

It’s also challenging to build a property portfolio to do that. As things stand you would need a good number of the units I referred to to top up the contributory pension to €80k. There is a lot of work in this for a retired person as they get older.

I would think a lot of them are selling up for this reason and because sale prices are so high. The real problem is that these are not being bought by investors but are instead being sold to owner occupiers. Great if you’re a first time buyer, bad news if you are a tenant.

DownByTheGarden

https://www.boards.ie/discussion/comment/120491483#Comment_120491483

There is also the worry that one bad tenant and there goes that income you thought you had for a good many years. Plus you might get trapped for life too.

redarmyblues

Anybody, any thoughts on the Cost Rental in Situ scheme, very little on media, but the it does seem to be up in running, I worry it will be dogged by over zealous and Ill thought out regulation that prioritises ideologically pure housing rather than the needs of actual people, the option to buy might work with shared equity available for those more cash strapped and funding though the local authority home loan scheme, not sure what percent deposits are proposed, but a loan from the bank of mum and dad could be paid back in about 2 years by the differential in rent and mortgage cost.

Not great for first time buyers but higher prices for starter homes might encourage house builders. There is 16bn surplus predicted for next year and what better place to spend it. It seems hard to get wrong.