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Thinking of buying 3 Apartments with inheritance

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2

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    #32
    Alfaboard
    Closed Accounts Posts: 14 ✭Alfaboard


    ok thanks for the replys guys think the best to do is talk to a financial advisor


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    #33
    dashoonage
    Registered Users Posts: 3,131 ✭✭✭dashoonage


    Buy a load of apartments down the med and get someone to airbnb them for 6 months a year......be grand hai!


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    #34
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    dashoonage wrote: »
    Buy a load of apartments down the med and get someone to airbnb them for 6 months a year......be grand hai!

    Haha- you've obviously not had to submit reciprochal tax returns in Spain or Portugal and here- to account for running a foreign business.

    Don't do it. Its not worth the trouble.


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    #35
    AmberGold
    Registered Users Posts: 1,285 ✭✭✭AmberGold


    Alfaboard wrote: »
    can you elaborate on this ??? daft?

    A year or so ago a friend picked up a small Commerical retail premises split into 4 units each circa 700/1000 sq ft, costing 650k or so it's generating 60k pa. This is the type of thing I'd be looking for. You may or not pick up this type of thing on Daft, personally I'd pick a location and go and speak with local agents.

    The Allsop auctions were a great place to pick up a bargain, haven't looked at them in a while.

    To be honest given the position you're in and the questions you're asking here it might be wise to sit on it for a while until you get a handle on what's involved.


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    #36
    Moonbeam
    Moderators, Education Moderators, Society & Culture Moderators Posts: 18,953 Mod ✭✭✭✭Moonbeam


    That would be my nightmare!
    If you have a job then allow about 50% of your rental earnings as tax.
    It isn't quite that bad but it will not be far off as you will have no mortgage relief to claim.


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    #37
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Moonbeam wrote: »
    That would be my nightmare!
    If you have a job then allow about 50% of your rental earnings as tax.
    It isn't quite that bad but it will not be far off as you will have no mortgage relief to claim.

    If you're self employed- it could be up to 54%
    Honestly- it never ceases to amaze me that tenants think they are paying over mad sums to landlords- the elephant in the corner who are getting away with murder- are the Revenue Commissioners..........


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    #38
    Lumen
    Registered Users Posts: 31,080 ✭✭✭✭Lumen


    The_Conductor wrote: »
    If you're self employed- it could be up to 54%
    Honestly- it never ceases to amaze me that tenants think they are paying over mad sums to landlords- the elephant in the corner who are getting away with murder- are the Revenue Commissioners..........
    "Getting away with murder"?

    It's the same for all declared sources of income, nothing specific to landlording.

    Also, that's the marginal rate. Nobody pays that on all income. Which I suppose you implied by "up to".


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    #39
    Peregrinus
    Registered Users Posts: 26,511 ✭✭✭✭Peregrinus


    Lumen wrote: »
    "Getting away with murder"?

    It's the same for all declared sources of income, nothing specific to landlording.

    Also, that's the marginal rate. Nobody pays that on all income. Which I suppose you implied by "up to".
    This.

    The OP has inherited money, and proposes to invest it. If he invests it so as to generate a return, that return will be taxable. To the extent that the return in is received in the form of income (rent, interest, dividends) it's subject to income tax. There isn't a specially punitive rate for landlords; they pay at the same rates as other investors.

    As for landlords paying at 54% on the entire rental income, that could only happen if the landlord is paying no deductible expenses - he's paying nothing towards maintenance, nothing towards keeping the property up to scratch, he's not spending any money on furniture or fittings on which he can claim capital allowances, nothing. He's not even insuring the place. He's simply letting the flat and its contents deteriorate steadily.

    Any landlord behaving in that fashion is ripping off his tenants.

    The OP won't be able to claim an interest deduction because he's not borrowing to acquire assets in which to invest, but this is because he doesn't need to borrow; he has inherited the money he needs. In these circumstances having no interest deduction to claim represents good fortune, not bad. And he'll have no interest deduction regardless of whether he invests in property or in other assets.


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    #40
    Pawwed Rig
    Moderators, Category Moderators, Home & Garden Moderators, Recreation & Hobbies Moderators Posts: 22,381 CMod ✭✭✭✭Pawwed Rig


    If I was the OP I would be leveraging the capital by combining it with debt so they should have some interest to deduct. It would be better to pay down your PPR and keep all debt on rental properties. But again we don't know enough about the OP to give decent advice here


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    #41
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    Peregrinus wrote: »
    There isn't a specially punitive rate for landlords; they pay at the same rates as other investors.

    No other investor, other than a landlord, has their cashflow assessed and PRSI/USC and other deductions- in the manner in which a landlord has.

    Rental income- is treated in a punitive manner compared to any other investment type. This has been acknowledged by tax authorities- and there have been several write-ups on it- including in publications such as 'The Economist' who are gunning to have debt as an allowable cost wholly cast aside as an allowable expense (for all investors)- but they acknowledge, Ireland can't go it alone- it would put us at a competitive disadvantage to elsewhere.

    I've argued here (and indeed, in correspondence to the Minister) for a flat-rate taxation of gross rental income- with no allowable expenses- specifically for the residential letting market- in order to level the playing field for all.


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    #42
    Lumen
    Registered Users Posts: 31,080 ✭✭✭✭Lumen


    The_Conductor wrote: »
    No other investor, other than a landlord, has their cashflow assessed and PRSI/USC and other deductions- in the manner in which a landlord has.
    Again, you're conflating pure investment and running a business.

    My non-landlord business has its expenses tracked to incredible detail, checked by accountants and audited periodically from Revenue.

    However, if I was merely being paid dividends from a shareholding in the business my personal expenses would be irrelevant, but the expenses of that business would still be assessed.


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    #43
    DubCount
    Registered Users Posts: 1,089 ✭✭✭DubCount


    Lumen wrote: »
    "Getting away with murder"?

    It's the same for all declared sources of income, nothing specific to landlording.

    There are lots of ways the "Landlord Business" is treated differently to a regular business.

    1) If I borrow money to set up an ice cream shop, I am allowed 100% of the interest on the loan as a deduction from my taxable profit. When I borrow money to become a landlord, I'm allowed deduct 80%.

    2) If my ice cream shop has a bad year and I make a loss, I can offset that loss against any other income (including employment income). If I make a loss as a landlord, I can only offset the loss against future rental income.

    3) If I fail to sign up to the ice cream regulator, there is no tax implication. If I fail to register with the RTB, my mortgage interest expense becomes 100% non-deductable.

    4) If some low-life decides he/she does not want to pay for ice cream, I can kick them out of my ice cream shop. If a tenant decides not to pay, he/she can stay on my premises for up to 2 years while I go through an expensive legal process to have them evicted.

    5) I can charge whatever I like for my ice cream. If the consumer doesn't like it, they can go to a different ice cream shop. As a landlord, the amount I can charge for my service is restricted if I am unfortunate enough to live in a RPZ.

    I would be delighted to see the landlord business treated as any other business. However, at a time when we don't have enough rental property in the market and we have significant price pressure on rents, Ireland Inc. will not even treat Landlords as the same way as other businesses.


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    #44
    Lumen
    Registered Users Posts: 31,080 ✭✭✭✭Lumen


    DubCount wrote: »
    I would be delighted to see the landlord business treated as any other business.
    It will be treated that way if you run it as as a limited company.

    The differences in treatment of ice-cream customers and tenants is a consequence of housing being treated as a basic human need, that's got nothing to do with tax.

    Some types of businesses are by their nature highly regulated. This isn't unique to landlording. Try fitting out and running a restaurant and see how you like the regulations involved there. Or maybe start manufacturing prescription pharmaceuticals in your kitchen and then go and moan about how unfair it is that you're victimised by oppressive rules and regulations.

    This is all just special pleading. Nobody likes paying tax or being told what to do.


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    #45
    Keyman123
    Registered Users Posts: 52 ✭✭Keyman123


    Just don't. Take it from someone who knows. Nightmare tennents, tax returns etc. Share the love and you may need it yourself in the future


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    #46
    Claw Hammer
    Registered Users Posts: 6,238 ✭✭✭Claw Hammer


    The Revenue treat rental income as "unearned income" and therefore treated in the same manner as investment income such as dividends or the like. This does not mean that it is not business. It is a business taxation regime peculiar to itself. The O/P is enquiring about investing. It is a reasonable point to make that unlike investing another media he will be running a business under this particular taxation regime under a special regulatory regime. Whether or not that is a good plan depends on many factors. Some relate to the attractiveness generally property investment medium and some relate to theO/P's personality and experience. Many people have made a lot of money from property investment and many others have failed to do so and suffered much frustration in the process.


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    #47
    vandriver
    Registered Users Posts: 3,462 ✭✭✭vandriver


    "Im wondering is it that simple to get buy say 3 small apartments for €180,000 and rent it out for say €1500 a month???(3375 euro a month combined)"

    Where does the €3375 come from.?


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    #48
    DubCount
    Registered Users Posts: 1,089 ✭✭✭DubCount


    Lumen wrote: »
    It will be treated that way if you run it as as a limited company.

    The differences in treatment of ice-cream customers and tenants is a consequence of housing being treated as a basic human need, that's got nothing to do with tax.

    This is all just special pleading. Nobody likes paying tax or being told what to do.

    I'm not asking for special treatment for landlords, just equality with other businesses that set up as sole traders.

    The differences in treatment of ice cream customers is a way of transferring responsibility for housing away from government and onto landlords. In the UK, a landlord can apply to a county court for an eviction cheaply and quickly. After the eviction, the responsibility for housing rests with the local authority. The landlord can move on to the next tenant.

    The OP is considering residential investment in Ireland (as an individual and not a company). I'm only highlighting differences between Landlord business and other businesses.


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    #49
    Bandana boy
    Registered Users Posts: 4,329 ✭✭✭Bandana boy


    Do you need the income from these investments to supplement your income now or is it investing for the future ?

    If this is about planning for the future I would borrow and buy 6 apartments.
    You should be able to structure the payments to clear the debt and your tax liabilities and in 20 years you have a nice ~9K a month income ,which is a very decent pension.


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    #50
    Mirror game
    Registered Users Posts: 82 ✭✭Mirror game


    OP, If you check the Bord Pleanala website you'll see solar farm projects being approved all over the country. These are to be built on plots of land about 25 to 35 acres, the way it works is the farmers owns the land and have signed up for long term lease with solar companies. The leases are usually €1000/1100 per acre and are index linked and are for 25 or even 40 years the length of the lease doesn't really matter because the terms would have be renegotiated at the end of the lease.
    If I were you I'd seek out those farmers get an advisor to look over the contracts and buy the land with the contracts on it. When the farmers hearabout your €650000 they'll listen to you alright.


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    #51
    Spark Plug
    Registered Users Posts: 120 ✭✭Spark Plug


    OP I'd go commercial think neighbourhood centre with a Spar/Londis and one or two other retail units already let. If the tenants are solvent and leases are fair long you may be able to gear up somewhat. But if you go down this route I would suggest you get good professional advice from an accountant and lawyer. Good luck


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    #52
    rsynnott
    Registered Users Posts: 4,003 ✭✭✭rsynnott


    There's something about this thread that makes me think nervously of 2006.


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    #53
    vandriver
    Registered Users Posts: 3,462 ✭✭✭vandriver


    Can you buy apartments that give a 10% return?


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    #54
    [Deleted User]
    Posts: 24,714 ✭ [Deleted User]


    rsynnott wrote: »
    There's something about this thread that makes me think nervously of 2006.

    I don't see any comparison? The problem with 2006 was 100%+ mortgages on massively over priced property not someone spending money that they have or even borrowing sensibly to buy property with is still nowhere near the boom prices.


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    #55
    Lumen
    Registered Users Posts: 31,080 ✭✭✭✭Lumen


    Marleigh Helpful Sonar wrote: »
    The problem with 2006 was 100%+ mortgages on massively over priced property....

    What's the effective maximum LTV under the Help To Buy scheme? And then what about with exemptions?
    Marleigh Helpful Sonar wrote: »
    ...still nowhere near the boom prices.

    Depends on location. Property in Grand Canal basin at 800/sqft suggest we are.

    https://www.myhome.ie/residential/brochure/241-the-waterside-ringsend-road-dubln-4/3975452

    AOR paid €480k + parking for a 2 bed in 2008.

    http://www.independent.ie/opinion/analysis/i-signed-my-life-away-for-the-sake-of-city-centre-apartment-26642735.html

    Unless her apartment was smaller than 56sqm this represents a rise over 2008 prices.


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    #56
    [Deleted User]
    Posts: 24,714 ✭ [Deleted User]


    Lumen wrote: »
    What's the effective maximum LTV under the Help To Buy scheme? And then what about with exemptions?

    Sorry I should have said 100%+ mortgages coupled with very high salary multipliers, allowing loans as deposits on less than 100% mortgages etc etc.

    95% or even 100% mortgages themselves are not a massive deal if the other aspects are kept in check like salary multiplier affordability etc, job security and so on
    Lumen wrote: »
    Depends on location. Property in Grand Canal basin at 800/sqft suggest we are.

    https://www.myhome.ie/residential/brochure/241-the-waterside-ringsend-road-dubln-4/3975452

    AOR paid ?480k + parking for a 2 bed in 2008.

    http://www.independent.ie/opinion/analysis/i-signed-my-life-away-for-the-sake-of-city-centre-apartment-26642735.html

    Unless her apartment was smaller than 56sqm this represents a rise over 2008 prices.

    I'm sure there are some cases but in general and especially in some of the real investment complex where people went bust prices are no where near. I know of one complex in cork prime location and nice apartments where prices dropped to close to 100k a few years ago and have risen back to 170kish (probably a bit more if one went for sale now). But these were over 300K in the boom.

    There are of course properties that didn't really completely collapse in price either during the recession so the prices of these places would be close to 2006 prices too.


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    #57
    rsynnott
    Registered Users Posts: 4,003 ✭✭✭rsynnott


    Marleigh Helpful Sonar wrote: »
    I don't see any comparison? The problem with 2006 was 100%+ mortgages on massively over priced property not someone spending money that they have or even borrowing sensibly to buy property with is still nowhere near the boom prices.

    Someone has 650k to invest. And a lot of people in the thread seem to be assuming, as a matter of course, that it should be put into property. All of it. Leveraged.

    Few if any of the amateur investors who got burned when the last bubble popped were using 100% mortgages.


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    #58
    Lux23
    Registered Users Posts: 7,134 ✭✭✭Lux23


    I really think you should go and pay for some good financial advice from an investment expert. There's lots of clever people posting here but it is hard to advise you without specifics.


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    #59
    rsynnott
    Registered Users Posts: 4,003 ✭✭✭rsynnott


    Marleigh Helpful Sonar wrote: »
    I don't see any comparison? The problem with 2006 was 100%+ mortgages on massively over priced property not someone spending money that they have or even borrowing sensibly to buy property with is still nowhere near the boom prices.

    I would also add that we're pretty near boom prices. The residential property price index for Jan 2006 was 115 for Dublin. This January it was 91.2. It topped out at about 130 in late 2006.

    Rents are higher now than they have ever been. And, perhaps most worryingly for a current investor, rents in "good value" low cost areas are _astonishingly_ high. There's surprisingly small difference between city centre rents and rents in traditionally less desirable suburbs with poor transport links. This is the case because of critical lack of supply. For this situation to correct itself, we don't even need a supply glut; we just need adequate supply in places that people actually want to live. Making long-term investment decisions on the basis of current rents is crazy, IMO.


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    #60
    Spanish Eyes
    Registered Users Posts: 15,968 ✭✭✭✭Spanish Eyes


    If it were me and I had that kind of capital, I would run a mile from being a residential landlord.

    However, I would buy some agricultural land, and let it on a long term lease. Huge tax reliefs available and no maintenance required. Put the rest in Prize Bonds and/ or the ten year solidarity bond.

    It is a no brainer to me....

    https://www.teagasc.ie/media/website/publications/2015/Long-Term-Land.pdf


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    #61
    [Deleted User]
    Posts: 24,714 ✭ [Deleted User]


    rsynnott wrote: »
    Someone has 650k to invest. And a lot of people in the thread seem to be assuming, as a matter of course, that it should be put into property. All of it. Leveraged.

    All of what is leveraged? If the op invests 650k cash in property there is no leveraging whatsoever nor could he end up "bust" or defaulting on anything etc.

    I'm not saying he should invest all or any of his money but he certainly has no comparison to people who when bust after 2006.


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