Renting on the QT for cash - how much is the landlord saving?

mickeymoney

Im in an apartment and paying 1000 euros PM cash no receipt.
The land lord is a friend of a friend and bought the apt a few years back (he has a house)
I have no intention of shopping him and I have been content with the situation to date.

At this stage Im struggling to make ends meet and Im wondering
how much he is saving buy not paying any tax on it?

I want to renegotiate the rent downwards and wondering how much Im worth to him versus him getting someone on an official lease. If I know this I know his hand and can negotiate with confidence.

spockety

Unless you can find out what his mortgage payments are you won't know his regular outgoing costs on the apartment. Shouldn't come into it though. Find out what similar places in the area are going for, knock ten percent off for market changes, and another ten to make up for the fact you are presumably not prtb registered or him paying tax and i would say you have a reasonable figure.

MysticalSoul

If the place his less than 5 years old he would have to pay Capital Gains Tax, as well as tax pending on his income, so could be 20%, if under circa €35,000 (can't remember what the threshold is), or 42% if it goes into the higher tax bracket. This would be your rent and his income combined.

mikemac

I suppose you are not claiming rent relief so.
If so this is costing you 400 euro per year.

I just hope you the price you're paying is below market rate to make up for it.

Climate Expert

You are an accomplice to tax evasion yet you are still trying to get your tax relief.

bills

well are you sure he is not paying tax?
Just because you dont have a lease & are paying cash does not mean the landlord is not paying tax. I know of a similar situation & landlord is paying tax.

latenia

Climate Expert wrote: »

You are an accomplice to tax evasion yet you are still trying to get your tax relief.

Nonsense. He pays his rent; what the landlord does is not his business. A ballpark figure for what he's saving in tax would be 30%. (Although it could be anywhere between 0 and 50%.)

foxy06

You are an accomplice to tax evasion yet you are still trying to get your tax relief.

He never actually said he was trying to claim his tax relief??? He is trying to negotiate his rent down.

red dave

If he's only getting the €1000 pm for the apartment then he won't owe any tax as that falls below even the rent a room allowance per year.

Climate Expert

red dave wrote: »

If he's only getting the €1000 pm for the apartment then he won't owe any tax as that falls below even the rent a room allowance per year.

Wrong advice. Its not rent a room so it is liable as tax depending on other earnings. And the rent a room allowance is 10K a year, not over 12K.

The_Conductor

mickeymoney wrote: »

Im in an apartment and paying 1000 euros PM cash no receipt.
The land lord is a friend of a friend and bought the apt a few years back (he has a house)
I have no intention of shopping him and I have been content with the situation to date.

At this stage Im struggling to make ends meet and Im wondering
how much he is saving buy not paying any tax on it?

Potentially nil. You have no idea whether he is tax compliant or not. Payment by cash means absolutely nothing. You are entitled to an annual rent review- I would phrase it in this regard- not go down the road of making what sound like vague threats to him......

mickeymoney wrote: »

I want to renegotiate the rent downwards and wondering how much Im worth to him versus him getting someone on an official lease. If I know this I know his hand and can negotiate with confidence.

Its entirely possible that you have no inherent value to him over a person with an official lease- or indeed that someone on an official lease may actually be worth more to him........ You simply don't know- and you don't have enough information on which to make presumptions. What you can do- is find out what the going market rate for the area is- and you can be certain its come down- and use the knowledge of the going rate for the area as a bargaining tool. I would not go down the road you are suggesting......

red dave

Climate Expert wrote: »

Wrong advice. Its not rent a room so it is liable as tax depending on other earnings. And the rent a room allowance is 10K a year, not over 12K.

sorry, my bad

shoegirl

bills wrote: »

well are you sure he is not paying tax?
Just because you dont have a lease & are paying cash does not mean the landlord is not paying tax. I know of a similar situation & landlord is paying tax.

Generally "cash only" indicates landlord doesn't want a paper trail, so more than likely he is not declaring the income. Secondly he's saving on CGT and may also have had reduced stamp duty if it was his first time buying a home.

Lastly, he is saving on the PRTB fee of 75 for the lease per year. Not much but a little.

Chances are he/she is clawing back about 40-45% if on the upper tax bracket, on the other hand he is probably losing a little in offsetting expenses. At 400 per months for a few years this quite adds up.

dandelion

The landlord may have bought this property as his new home, and paid significantly lower stamp duty. Since he's been renting it he is now liable to pay the higher rate of stamp duty plus penalties. Impossible to work out how much this might be without knowing the price he paid for it, how long ago he bought it, whether it was new or secondhand. Why not just ask him if he'll lower the rent?

Repolho

shoegirl wrote: »

Secondly he's saving on CGT and may also have had reduced stamp duty if it was his first time buying a home.

How is he saving on CGT?

The_Conductor

Repolho wrote: »

How is he saving on CGT?

Good question. CGT only arises on the disposal of the property......

RATM

OP AFAIK rent relief can be claimed and backdated for up to 5 yrs. Thats a potential €400 that you are owed in tax back per year you have been there. Could help if things are running tight. You don't need receipts , just his name and address and the dates you are there. They do ask for his PPS no. but if you dont have it they can still process it, at least thats the way it worked out for me a few years back.

Victor

There is no CGT on you principal private residence.