Is the end of the road for landlords coming ?

How Strange

We are accidental landlords but we will definitely sell in 2 years max when we can make a bit of a profit on the sale. I was shocked when we did our calculations and realised that for a property renting for approx €15k per annum we would max get €1k profit. That's reduced for this year as we had to buy a tumble dryer. Theres simply no incentive to be a landlord considering the paperwork we have to do and the regulations we have to comply with. Not to mention the ridiculous amount of tax.

Yourself isit

riclad wrote: »

There s many landlords in negative equity , they,ll sell up as soon as they can afford to , when the loan on their rental home is less than the
the value of the house.
Landlords should get at least 20 per cent extra for renting to rent allowance tenants ,in urban area,s theres very little reason to take on rent allowance tenants when theres lots of professional working people looking for a place to rent .
Theres 1000,s of landlords out there making very little profit ,
after paying tax, property tax,usc etc
companys like apple pay 1 per cent tax, while landlords pay 50 per cent plus.

Are landlords taxed more than the rest of us?

JustLen

wrote:

...a property renting for approx €15k per annum we would max get €1k profit....

I would be very greatful if you could break this down for me? As in where the other 14k actually goes.

amcalester

JustLen wrote: »

I would be very greatful if you could break this down for me? As in where the other 14k actually goes.

Rent is subject to Income tax, PRSI and USC so that's adds up to about 8k add to that only 75% of the interest is tax deductible. LPT and RTB registration has to be paid, maintenance and upkeep etc.

Slydice

amcalester wrote: »

Rent is subject to Income tax, PRSI and USC so that's adds up to about 8k add to that only 75% of the interest is tax deductible. LPT and RTB registration has to be paid, maintenance and upkeep etc.

No... as in.. actually break it down... link to actual figures.. explain where the money goes item by item.

This type of short summary doesn't even begin to show what's happening.

April 73

How Strange wrote: »

We are accidental landlords but we will definitely sell in 2 years max when we can make a bit of a profit on the sale. I was shocked when we did our calculations and realised that for a property renting for approx €15k per annum we would max get €1k profit. That's reduced for this year as we had to buy a tumble dryer. Theres simply no incentive to be a landlord considering the paperwork we have to do and the regulations we have to comply with. Not to mention the ridiculous amount of tax.

What needs to be factored into this €1k profit figure is the fact that the mortgage has been paid for a year and the outstanding capital has been paid down (assuming a repayment not an interest only mortgage)
This is more important if the property is not in negative equity - but does still apply in a negative equity situation too. The profit might be €1k in your hand but your debt has decreased and your equity has increased.

rossmores

Yourself isit wrote: »

riclad wrote: »

There s   many landlords  in negative equity   , they,ll  sell  up   as  soon as they   can afford  to  ,  when the   loan   on their  rental home  is  less than the
the value  of the  house.
Landlords  should  get  at least  20  per cent  extra  for renting to  rent allowance  tenants ,in urban  area,s  theres very  little reason to take on  rent allowance  tenants  when   theres   lots of  professional working  people  looking for  a place to rent  .
Theres 1000,s  of landlords  out there making  very little  profit    ,
after paying tax,  property  tax,usc etc
companys  like apple  pay 1 per cent  tax,  while landlords  pay 50 per cent plus.

Are landlords taxed more than the rest of us?

Yes as a business is is very unfairly taxed it is deemed as being unearned income but revenue have applied every possible levy and restricted reliefs 1 example is property tax liability falls to the LL even in the German model it is deemed as an expense.

El_Duderino 09

Id imagine it's becoming far too difficult for accidental landlords. If an industry can bare people who are completely untrained and never intended to do the job, then it's bound to be taken over by bigger companies who can do the job professionally.

Isn't it a sign of an incredibly relaxed industry when so many people can be involved in it by accident?

April 73

I would love to see statistics on the number of true accidental landlords. I believe they do exist, but I think the numbers are not as high as the media suggests.
I also think they are a Dublin phenomenon.

The_Conductor

Yourself isit wrote: »

Are landlords taxed more than the rest of us?

Landlords and the letting of property in Ireland- is taxed in a manner unlike any other business activity. There is no other business activity in Ireland where a company can be subject up to 54% tax on gross revenue (this is the most a landlord can pay- however- its quite common for smaller landlords to pay >50%, particularly if the property being let involved inherited property which does not have a mortgage against which 75% of mortgage interest is tax deductible.

If letting property is supposed to be treated purely as a business by landlords- it should also be treated as a business, and purely as a business, by the Revenue Commissioners.

The greatest inequity of all though- is the manner in which the larger landlords hold property in 'charity structures' and effectively don't pay any tax whatsoever to the Irish Revenue Commissioners- instead giving international investors an average of 12-15% returns- on the back of legally using dubious structures to avoid paying what anyone would imagine is their fair dues to the taxman.

This is partially why I said if we have a corporation tax rate of 12.5%- apply it as a flatrate tax with no deductions whatsover against gross rental income in the residential letting sector- and make all players pay the exact same tax. If this means you have to specify ongoing maintenance and improvements- as its no longer a tax deductible activity for landlords- then do it.

If you want to imagine letting property is not a business- and shouldn't be run as a business- then fine- continue treating it as 'unearned income' and tax it at up to 54%- but don't imagine that people are going to remain in the sector- when its impossible to compete with ye REITs and Vulture funds- who don't bother paying any tax whatsoever..........

Get it?

I take it when you say- 'like the rest of us'- you mean are landlords taxed like Joe and Mary walking up the street who are tenants? There isn't a yes and no answer- its like that famous line from George Orwell's famous novel- Animal Farm. "All animals are equal, but some animals are more equal than others........"

The_Conductor

April 73 wrote: »

I would love to see statistics on the number of true accidental landlords. I believe they do exist, but I think the numbers are not as high as the media suggests.
I also think they are a Dublin phenomenon.

I live in Dublin- but am personally aware of family and friends with several 'accidental landlords' amongst them (all of whom are renting property themselves in my immediate neighbourhood here in Lucan- while letting their sole properies which they own elsewhere). Their property is all in Galway- none of their 'accidental lettings' are Dublin based.

I think the only people who could really quantify the number of 'accidental landlords' are the Revenue Commissioners- and its simply not the sort of statistics they release. The RTB does release some statistics- notably on the number of landlords with single or multiple properties.

The RTB statistics show that there are 180,000 landlords in Ireland.
Of these- 84% have two or fewer properties.
It is further the opinion of the RTB (Anne Marie Caulfield) that 36-40% of all landlords should be classified as 'accidental landlords' that is "while they are involved in letting properties, they never intended to be involved in the sector". By that count- according to the RTB- there are over 70,000 'accidental landlords' in the country.

This information was released by the RTB as part of an education campaign to try and inform both landlords and tenants of their obligations in June 2015- I'm not aware that there is more uptodate information in the public domain (though I'd be very interested in reading any more uptodate information- if anyone can get hold of it).

April 73

If that is the case it's actually a far worse number than I would ever have guessed. It's a horrible situation to be in & if that's the number of affected people it's shocking.
These people really are being crucified by current & expected legislative changes to the sector.

The_Conductor

April 73 wrote: »

If that is the case it's actually a far worse number than I would ever have guessed. It's a horrible situation to be in & if that's the number of affected people it's shocking.
These people really are being crucified by current & expected legislative changes to the sector.

With respect of those with two or fewer properties- who have to rent to house themselves elsewhere (they had to move to find work, or whatever)- the greatest inequity- is while they pay tax at their marginal rate on rental income- as unearned income- they have to pay rent themselves- from their net income after all tax and deductions.

I.e. you can't offset rental income- against rental outgoings. This just seems wrong to me.

c montgomery

I'm an accidental landlord and I know of many others in cork. We all have good tenants and value them dearly, I currently charge 20% less than I could easily get. The reason I do this is 225 euro more in rent is alot to my tenant but to me it's about 110 after tax. That's about 1400 per year in lost rent but I have a tenant who is happy, aware they are getting a good deal and happy to stay for years. This reduces my vacancy rate and letting fees.
All of my friends/colleagues who are accidental LL are doing the same.

LL are not all assholes. In my experience it's the big letting companies who are jacking up the prices but my experience is limited to my surroundings.

The tax is punitive, I pay tax of 30% on shares I make a profit on. This is the rate rental income should be taxed at IMO.

handlemaster

April 73 wrote: »

What needs to be factored into this €1k profit figure is the fact that the mortgage has been paid for a year and the outstanding capital has been paid down (assuming a repayment not an interest only mortgage)
This is more important if the property is not in negative equity - but does still apply in a negative equity situation too. The profit might be €1k in your hand but your debt has decreased and your equity has increased.

This is a good example the landlord comes out on top at the end of the year with 1000 in the pocket. But one must consider the risks of bad tenants (anti social behaviour , not paying rent , not paying on time , un expected boiler replacement etc) You mention capital been paid down , thats great and part of it but if the property runs at just 1000 profit per year... How do you pay for the risks ? I had a tenant who cost me 10k . At that rate its not an investment its a property that could put me and my family on the street.

mattser

amcalester wrote: »

Rent is subject to Income tax, PRSI and USC so that's adds up to about 8k add to that only 75% of the interest is tax deductible. LPT and RTB registration has to be paid, maintenance and upkeep etc.

That's spot on. FFS anyone who wants that broken down again is only being awkward.

Field east

April 73 wrote: »

I would love to see statistics on the number of true accidental landlords. I believe they do exist, but I think the numbers are not as high as the media suggests.
I also think they are a Dublin phenomenon.

Where has this term come from and what does it mean? Would I be right in saying that if we go back to the 60s or even 70s that the bulk of the LLs were smalltime operators i.e. The average owning one or two houses in bedsits/flats. Is the trade classifying these as accidental? These owners also probably held down a full time job/ had other businesses.
Also , I get the impression that an individual who gets a mortgage, buys and lets is classified as an accidental LL . I cannot fathom why the term is used here. After all the purchaser made a conscious decision to borrow, buy and let as something she/he wanted to do as an investment or whatever.
Why do'nt we use the same term when others get into another small business, take on some other economic activity on the side. I find it a derisory term also as if Accidental LLs are of a lesser species than Real/Genuine/ Salt of the Earth/Very pro tenant/Fair and anti rip off LLs

beauf

It's amazing we have all these threads about LLs but none about the actual housing shortage.

c montgomery

beauf wrote: »

It's amazing we have all these threads about LLs but none about the actual housing shortage.

Maybe cause the shortage is not as bad as it's being made out

I know of a case where a woman and her 2 kids were on the radio as they were living in a garage. What you weren't told us she had refused 2 houses already as they were private rented houses and she wanted her own council house.

Worst case scenarios get peddled out by the media but not much research is done into them. That takes too much time and doesn't get as many clicks

Graham

beauf wrote: »

It's amazing we have all these threads about LLs but none about the actual housing shortage.

There are plenty of threads that directly or indirectly discuss the housing shortage. Most of them are started from the perspective of one of the symptoms of the housing shortage as experienced by a prospective-homeowner, landlord, or tenant.

handlemaster

beauf wrote: »

It's amazing we have all these threads about LLs but none about the actual housing shortage.

Landlords are people to. They are the who are providing the accomodation but are been screwed over by taxes and now a loss of property rights. There are alot of people who only see the rent dont see the sacrifices behind it. Landlords dont have magic money trees or magic beans, been fair to all is what is needed not just the vote pleasing antics we have seen over the last number of years.

pilly

April 73 wrote:

I would love to see statistics on the number of true accidental landlords. I believe they do exist, but I think the numbers are not as high as the media suggests. I also think they are a Dublin phenomenon.

75 per cent of LL's in Ireland have 2 or less properties. Huge compared to other countries. If it wasn't for the small 'LL we'd be in a worse state. Not all those are accidental admittedly but a major amount of them.

JustLen

mattser wrote: »

amcalester wrote: »

Rent is subject to Income tax, PRSI and USC so that's adds up to about 8k add to that only 75% of the interest is tax deductible. LPT and RTB registration has to be paid, maintenance and upkeep etc.

That's spot on. FFS anyone who wants that broken down again is only being awkward.

Settle.

Broken down again? It wasnt broken down in the first place.

8k plus LPT plus RTB reg. doesnt make 14k? Or does it, I dont know thats why I asked.

antoinolachtnai

JustLen wrote: »

Settle.

Broken down again? It wasnt broken down in the first place.

8k plus LPT plus RTB reg. doesnt make 14k? Or does it, I dont know thats why I asked.

Add another 5k or 10k of capital repayments and you are underwater pretty quickly.

Yourself isit

The_Conductor wrote: »

Landlords and the letting of property in Ireland- is taxed in a manner unlike any other business activity. There is no other business activity in Ireland where a company can be subject up to 54% tax on gross revenue (this is the most a landlord can pay- however- its quite common for smaller landlords to pay >50%, particularly if the property being let involved inherited property which does not have a mortgage against which 75% of mortgage interest is tax deductible.

If letting property is supposed to be treated purely as a business by landlords- it should also be treated as a business, and purely as a business, by the Revenue Commissioners.

The greatest inequity of all though- is the manner in which the larger landlords hold property in 'charity structures' and effectively don't pay any tax whatsoever to the Irish Revenue Commissioners- instead giving international investors an average of 12-15% returns- on the back of legally using dubious structures to avoid paying what anyone would imagine is their fair dues to the taxman.

This is partially why I said if we have a corporation tax rate of 12.5%- apply it as a flatrate tax with no deductions whatsover against gross rental income in the residential letting sector- and make all players pay the exact same tax. If this means you have to specify ongoing maintenance and improvements- as its no longer a tax deductible activity for landlords- then do it.

If you want to imagine letting property is not a business- and shouldn't be run as a business- then fine- continue treating it as 'unearned income' and tax it at up to 54%- but don't imagine that people are going to remain in the sector- when its impossible to compete with ye REITs and Vulture funds- who don't bother paying any tax whatsoever..........

Get it?

I take it when you say- 'like the rest of us'- you mean are landlords taxed like Joe and Mary walking up the street who are tenants? There isn't a yes and no answer- its like that famous line from George Orwell's famous novel- Animal Farm. "All animals are equal, but some animals are more equal than others........"

When landlords say that they are taxed at 50%, that's the marginal rate. It's clearly nonsense. If all you do is let put one property and that's your sole income and you earn 18k your tax rate is about 5%.

In other words it assumes that all landlords have other jobs. High paying jobs. It then confuses marginal rates with overall taxation.

Why would this income be treated differently to any other income operated by sole traders? Comparing to companies doesn't make any sense - for corporate profit to end up in someone's bank account it's paid as dividends or income. Then it is taxed as normal income.

Yourself isit

As for corporations paying 12.5%. Set one up. You can set up a single director company in Ireland now afar as I know. I did that in the UK as an IT company. It was a mistake.

That 12.5% (it was 20% in the UK) is company profits not your profit. if you then pay yourself dividends you pay the "50% marginal" as the money is leaving the company and entering your bank account. That's payment. In that case the marginal tax would be 62%. Better to pay it as wages where the wages are expensed. But then you are back to the same tax on wages as the rest of us.

goz83

Yourself isit wrote: »

As for corporations paying 12.5%. Set one up. You can set up a single director company in Ireland now afar as I know. I did that in the UK as an IT company. It was a mistake.

That 12.5% (it was 20% in the UK) is company profits not your profit. if you then pay yourself dividends you pay the "50% marginal" as the money is leaving the company and entering your bank account. That's payment. In that case the marginal tax is 62%. Better to pay it as wages where the wages are expensed. But then you are back to the same tax on wages as the rest of us.

Spot on. If only makes sense if the money is not leaving the company and is perhaps being used to grow the company.

April 73

handlemaster wrote: »

This is a good example the landlord comes out on top at the end of the year with 1000 in the pocket. But one must consider the risks of bad tenants (anti social behaviour , not paying rent , not paying on time , un expected boiler replacement etc) You mention capital been paid down , thats great and part of it but if the property runs at just 1000 profit per year... How do you pay for the risks ? I had a tenant who cost me 10k . At that rate its not an investment its a property that could put me and my family on the street.

I think it's a valid part of the LL story when somebody chooses to invest in property. You should only invest in property if you can take the rough with the smooth.
If you're an accidental landlord then the risk of a non-paying tenant is magnified dramatically & paying down the capital matters much less.

There is no "one size fits all" type of landlord.

handlemaster

April 73 wrote: »

I think it's a valid part of the LL story when somebody chooses to invest in property. You should only invest in property if you can take the rough with the smooth.
If you're an accidental landlord then the risk of a non-paying tenant is magnified dramatically & paying down the capital matters much less.

There is no "one size fits all" type of landlord.

If the government made it easier to get rid of problem tenants there would a more open mind to the type of tenants landlords would take. Its in the governments interest to do this as they want private landlords to take on the social tenants

riclad

We have a real crisis , women are living in hotels with children, theres no space for kids to play Hotels are not designed for people living there 7 days a week.
IF someone rents a private house on rent allowance they are still on the housing list,and still able to get council housing .
There needs to be more legal clarity as to when a landlord can evict a tenant and some way of getting back rent that was not paid ,
some tenants stay in a house and wait for the court case whiler paying no rent for a year.