Is there anywhere that you can get the total that the government get from rents

appfry

I was wondering exactly how much the Irish government made in total from taxes and all other charges on LLs last year but cant find it anywhere.

For definite the government got much more than LLs ended up with from the rent they received.

Just in the last few years they

1 - Removed the tax that tenants could get back on their rent. That goes straight into the government coffers for a start.

2 - I think they take over 50% from your average landlord in taxes too.

3 - Then we have all of the other indirect things like RTB (a fee a LL pays and gets nothing for it it would seem, but it keeps a quango going for them), property tax (when passed on to the tenant the government take over 50% of it in tax. If the landlord needs to pass on the full amount he must double it) and probably much more.

Next theyll be sticking VAT onto rent and blaming the LLs for being greedcy when they pass it on.

Id like to see exactly how much the total is that government make from rentals.

Paulw

You could possibly try contacting the Revenue and ask them, with a freedom of information request.

appfry

Its not that important to me that I want to go through the torture of contacting revenue.

I just thought it might be available somewhere handy on the net. <mod snip: this is not a politics forum>

newacc2015

Well the few thousand housing units owned by REITs and vulture funds are paying zero taxes on their rental income. So that is a massive issue with calculating the revenue the state gets from rents

holly_johnson

appfry wrote: »

Its not that important to me that I want to go through the torture of contacting revenue.

I just thought it might be available somewhere handy on the net.

If it's not that important to you then why ask? An FOI request is very easy to do...

rsynnott

appfry wrote: »

When you pay €1000 in rent, Noonans share is probably about 600 or 700 of that. Maybe LLs should itemise their rent receipts and put the amount of tax on the receipt every month.

Nonsense. Assuming that the landlord is already earning at least 70k before rental income, they pay 40% income tax, plus 8% USC, plus 4% PRSI on the excess. However, they do get to deduct 75% of interest paid, plus expenses relating to maintaining the property, letting it, etc. The only way to get close to your figure would be if the landlord owned the property outright or was otherwise not paying interest, and if they didn't maintain it or incur costs when letting it. Even then, I don't see how you'd realistically get to 600. In most cases, unless they have a particularly cheap mortgage, they're going to be paying way less than the figure you mention. If they do have a cheap tracker, well, that's nice for them, isn't it? No reason the state should subsidise their capital repayment, though.

The landlord will in general pay less tax on their rental income than they would on income coming from working a normal job. Of course, they do have to pay a mortgage on top of that, but most of the interest portion is a deduction, so the mortgage isn't jut an expense; it's contributing towards their owning the property.

endacl

If you're happy with inexact figures, consider the amount of cash a government may receive in terms of:

(A) No cash,
(B) Some cash,
(C) Loads of cash.

I'd say is a fair bet that '(C) Loads of cash' would be the most likely option.

Hope this helps.

rsynnott

Worked example. (I think this is correct, not a tax expert.) Landlord buys a property worth 350k with a 25 year 280k mortgage at 4.5% (BTL rates tend to be pretty high). Total repayments of ~1550 pm, interest portion starts at ~1k pm, and decreases slowly over time. They rent it for 2000 a month. They have a 2000 per year management charge, and 1000 per year maintenance and letting expenses.

The first year, they make 24000. They pay 12000 in interest, of which 9000 is deductible. They also pay the 2000 management charge, and 1000 maintenance and letting expenses, so total of 12k deductible, so 12k liable for tax. Let's assume they have a well-paying job, and so pay the maximum 40%+8%+4% on their rental income. So Mr Noonan gets 6240 euro, or about 250 euro per 1000 paid by the tenant. Not 600. In cash flow terms, the landlord gets 24000, and pays out a total of 18600 mortgage repayments plus 6240 tax plus 3000 in charges, so 27,840 euro, so they're cash flow negative. However, they have paid 6,600 off their mortgage, so they're actually up 3800 for the year.

Obviously, all example figures, and there are edge cases where it works out much higher (usually where the landlord has a lot of equity, or where there's a particularly big gap between rents and mortgage repayment for local market reasons). But it seems like a reasonable example case.

appfry

rsynnott wrote: »

Nonsense. Assuming that the landlord is already earning at least 70k before rental income, they pay 40% income tax, plus 8% USC, plus 4% PRSI on the excess. However, they do get to deduct 75% of interest paid, plus expenses relating to maintaining the property, letting it, etc. The only way to get close to your figure would be if the landlord owned the property outright or was otherwise not paying interest, and if they didn't maintain it or incur costs when letting it. Even then, I don't see how you'd realistically get to 600. In most cases, unless they have a particularly cheap mortgage, they're going to be paying way less than the figure you mention. If they do have a cheap tracker, well, that's nice for them, isn't it? No reason the state should subsidise their capital repayment, though.

The landlord will in general pay less tax on their rental income than they would on income coming from working a normal job. Of course, they do have to pay a mortgage on top of that, but most of the interest portion is a deduction, so the mortgage isn't jut an expense; it's contributing towards their owning the property.

Why dont we isolate a property.
Say in thi case.
LL owns the property outright.
They have other income that takes me into the higher tax bracket.

So the calculation for the property would be for the property ONLY not taking into account any of their other income as it has nothing to do with the property (rough figures for last year).

Rent €13000 PA
Expenses €1000

Profit €12000

Per month that is €1000
I paid well over 50% tax on that profit.

Expenses dont go to the LL. They arent free even though they reduce his tax bill. They still cost him. In fact a good portion of the expenses go to Noonan too.


Of course you could have it the other way and the LL has a huge mortgage and no other income at all.
Then they would pay only a little tax on the property, but how common would that be.

rsynnott

appfry wrote: »

Why dont we isolate a property.
Say in thi case.
LL owns the property outright.
They have other income that takes me into the higher tax bracket.

So the calculation for the property would be for the property ONLY not taking into account any of their other income as it has nothing to do with the property (rough figures for last year).

Rent €13000 PA
Expenses €1000

Profit €12000

Per month that is €1000
I paid well over 50% tax on that profit.

Well, yes, if by "well over 50%" you mean "52%" (40% high-rate income tax + 70% highest-rate USC + 4% unearned income PRSI). This is what a person earning >70k before their rental income will pay on most unearned income, so that seems reasonable. And less than would be paid on earned income, in total. If the same person, earning over 70k per year, gets a raise of 12k/year, the revenue's take on that is 40% high-rate income tax + 7% highest-rate USC + 4% employee PRSI + 10.75% high-rate employee PRSI = 62.75%.

However, it's certainly not reasonable to say that the tax take on the average rent paid is >50%. Many landlords, perhaps most, have a mortgage on the rented property. Many landlords, perhaps most, do not have at least 70k non-property income. Many landlords are retired. Some landlords are REITs or other corporate entities, and have a different tax structure (not entirely advantageous; the private non-corporate landlord has an easier time with capital gains, AIUI). Some landlords are voluntary bodies like Tuath.

A special low rate of tax for landlords would not be particularly useful in reducing rents, because rental price is driven by the market, not by what providing the product actually costs. At most, it would give a competitive advantage to the landlord who owns a property outright vs the mortgaged one. And the lost revenue to the exchequer would have to be made somewhere else. It would also tend to cause a movement from other forms of unearned income to property investment, thus driving up house prices; it would in effect artificially increase the value of a house as an investment. This would, of course, be undesirable. In practice, reducing taxes here would likely not reduce rents, and it might even increase them by boosting house prices out of the reach of FTBs and increasing the number of people who have to rent.

So, let's say person A has a house worth 200,000 owned outright, and gets 10k a year in rent, a 5% gross yield. They're high income, so max rates of tax, so get about a 2.5% net yield. Person B owns shares worth 200k, and gets 11k per year dividend, a 5.5% net yield. They're also high income, so 2.75% net yield. Person B does not envy person A. Now let's say we change the tax system such that rental income is taxed at a flat 30%. Person A is suddenly making a 3.3% net yield. Person B rushes out to sell their shares and buy a house. Many more person Bs follow, and the demand pushes house prices higher. A year or so later, person C buys the same house for 250,000, and get the same rent. They're now making a 2.5% net yield. Houses become a less desirable investment again. Meanwhile, person D was going to buy a house, but, oops, they're up 25%! They have to rent instead, driving rent prices up. No-one wins, except person A and B.