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Should we increase Rent?

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  • 22-01-2017 1:45pm
    #1
    nehna
    Registered Users Posts: 1 ✭


    My husband and I are currently renting out our home. Our tenants have been there for approx three years. We are also renting and paying a much higher rent for the property that we are living in. The rent we are paying was increased last year. My husband is afraid that if we increase the rent it will affect us badly with us having to pay much more in taxes. We are already struggling with out rent and bills as it is. We never planned on becoming landlords and don't know what to do for the best.


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    #2
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Assuming you're paying 52% tax, you'll continue to pay 52% tax. If you're on the lower rate anything pushing you into the higher rate will be charged at 52%, you won't pay 52% on the whole.

    So if you increase the rent by €1000 a year you'll net around €480.

    All these figures are extremely rough for illustration purposes.

    Bear in mind you may be very limited on how much you can increase the rent by, check with your solicitor/accountant.


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    #3
    Mrs OBumble
    Registered Users Posts: 25,960 ✭✭✭✭Mrs OBumble


    What is the market rent for your property?

    The point about taxes is bogus: yes you will pay more than you do now, but only up to 50% of the increase.

    The real issue is whether the increase will make your tenants move out and if so whether you can replace them.


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    #4
    Baby01032012
    Registered Users Posts: 1,622 ✭✭✭Baby01032012


    Mrs OBumble wrote: »
    What is the market rent for your property?

    The point about taxes is bogus: yes you will pay more than you do now, but only up to 50% of the increase.

    The real issue is whether the increase will make your tenants move out and if so whether you can replace them.

    Market rent doesn't really matter as they can only increase it by 4% based on what they were charging assuming in rent pressure zone.


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    #5
    newacc2015
    Closed Accounts Posts: 2,379 ✭✭✭newacc2015


    Depending on your income, even though the marginal rate of tax is 52% even if you increase the rent, you might only have a tax rate of 30% on the increase. If the rent is €1k per month, that might be another €28 per month after tax. It is not a whole load, but it will add up over time.

    If you have a pension at work, you might consider increasing your contributions by the rent increase amount. So the rent increase essentially be tax free, as you will be putting the rent increase directly into your pension. You wont have more money at the end of the month, but your pension will be increasing


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    #6
    April 73
    Registered Users Posts: 846 ✭✭✭April 73


    The new legislation has made it clear that there is nothing to be gained as a LL if you charge under the market rate. Unfortunate for those tenants who are currently paying below that market rate outside of the new RPZs, but true from the LL's perspective.
    You will not end up with less money if you up the rent. The increase will cover the extra taxes.


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