Rent relief tax credit to be abolished in budget.

AARRRRGH

I posted this in another thread. Cant tell you who told me about it, but they are involved in the research sought on this.

I think it probably belongs here, more than in the thread I was replying to.

The rent relief tax credit is to be removed in the upcoming budget. This may be instead of, or along with a property tax.


Imagine 4 working people sharing in a 3 bed house. Thats €1600 that revenue gives out. A pittance according to some people but it sure adds up. There is absolutely no point in giving this money back.

What are people going to do if they dont get it? Live on the street?

No they arent. Any sensible person is now paying less rent than they were a few years ago. They wont miss this money.

People who dont pay tax, wouldnt get it anyway.

It does not have to be calculated nor enforced. They just stop the credits.

They do the same with mortgage interest relief. Bobs your uncle.

Job done, coffers increased.

Now compare this to the mechanics of applying, collecting and enforcing a property tax.

A feasibility study on this is just about done. We''l all be hearing about it soon.



One argument people had against this is that this is used to make people shop non-compliant landlords. Not true.

Its the fact that they have to be registered to claim expenses and part of mortgage interest back, that makes them register with the prtb.

So not a lot of money is made from renters shopping their landlords.

Revenue have other ways of tracking down these non compliant landlords. And they already know who most of them are. Wait til the crackdown, with interest and penalties starts and those non compliant will realize how stupid they were.

Anyone know exactly how much money is given back in tax credits to all of the renters over a year in total?

T Corolla

There is a strong possibility of this been aboilished along with service charges
I think the max amount of rent relief per annum is 550 Euros

T Corolla

T Corolla wrote: »

I think the max amount of rent relief per annum is 550 Euros

The mortgage interest relief is a lot more though, many folks will be f**ked if that's abolished.

mikemac

A renter gets 400 euro in rental relief.
I'll take your word for it, it was 330 euro a few years back, it's not much money at all. Must get my claim in, damn my procrastination!
Mortgage interest relief is far, far higher so any plans to cut this?

Regarding shopping landlords, there are many landlords who move abroad for a year or even move back with their parents on losing their job.
Tenants rents the home, nothing is declared. I've certainly dealt with "cash in hand" landlords who never have a receipt book, I didn't know any better but do now.

Or most commonly is a couple each own a house and they move in together in one house and rent the other.
They still get post delivered there or leave one bedroom free so they can claim they live there but they don't. Only to call around to collect post now and again. The rent a room scheme has a tax free limit so if you leave one room free and rent is under that limit, then people declare it but tax free.

Scams everywhere but cut rent relief instead?

One day the Revenue will declare an amensty and claim huge sums of money in back taxes and penalties, a bit like a rainy day fund.

Tim Robbins

feelingstressed wrote: »

Scams everywhere but cut rent relief instead?

One day the Revenue will declare an amensty and claim huge sums of money in back taxes and penalties, a bit like a rainy day fund.

The rent relief was a good way of keeping track of landlords.
Prior to its introduction the majority of landlords were tax dodging.

mikemac

I wouldn't say the majority were tax dodging. As with most things, I'd say most people follow the law and are compliant, god bless my innocence
But it was huge and even now it goes on. It'll never go away

If the Revenue can do what they did with Ansbacher, it'll fill some holes in the budget.
That's if people come forward in an amnesty and pay.

AARRRRGH

RoverJames wrote: »

The mortgage interest relief is a lot more though, many folks will be f**ked if that's abolished.

This has already been removed for most people. I think the max is 7 years at the moment. It will be completely gone in a few years.

murphaph

AARRRRGH wrote: »

This has already been removed for most people. I think the max is 7 years at the moment. It will be completely gone in a few years.

As a landlord, I can offset 75% (used to be 100% until middle of 2009) of mortgage interest paid against income tax....this will also be reduced to nil over the coming years (and rightly so).

Agree with the OP though: much easier and 110% bullet proof to simply eliminate existing reliefs rather than SPEND more money on enforcing new taxes. Let's eliminate reliefs and see where that brings us (usual disclaimer: public sector needs to get it's innefficient ass into gear and eliminate ANY and ALL waste of taxpayers' money, it's immoral to increase taxes/cut reliefs without tackling both public sector waste and exessive welfare payments).

murphaph

murphaph wrote: »

As a landlord, I can offset 75% (used to be 100% until middle of 2009) of mortgage interest paid against income tax....this will also be reduced to nil over the coming years (and rightly so).

Any more detail on this ? When will it be nil ?

AARRRRGH

RoverJames wrote: »

Any more detail on this ? When will it be nil ?

It wont.

murphaph

RoverJames wrote: »

Any more detail on this ? When will it be nil ?

Well, I don't know for sure, I thought that was clear that it was my opinion that it will steadily be reduced to nil over the coming years. Reducing it from 100% to 75% is a clear indication it is to be phased out IMO, but we'll see.

As for owner occupier TRS...that's a MUCH more sensitive political hot potato: It affects a LOT more people directly and probably costs the state a lot in 'lost' tax revenue.

murphaph

murphaph wrote: »

Well, I don't know for sure, I thought that was clear that it was my opinion that it will steadily be reduced to nil over the coming years. Reducing it from 100% to 75% is a clear indication it is to be phased out IMO, but we'll see.

I was thinking it was a factual statement rather than your opinion

AARRRRGH

murphaph wrote: »

Well, I don't know for sure, I thought that was clear that it was my opinion that it will steadily be reduced to nil over the coming years. Reducing it from 100% to 75% is a clear indication it is to be phased out IMO, but we'll see.

As for owner occupier TRS...that's a MUCH more sensitive political hot potato: It affects a LOT more people directly and probably costs the state a lot in 'lost' tax revenue.

It wont be reduced any further as its a legitimate business expense. It probably shouldnt even have been reduced to 75%. It was just easy money at the time and a popular action to take. It cannot stand up to scrutiny at all.

But thats another argument for another thread anyway. I know the "hang the evil landlords brigade" will be on right away, but it would be better argued in a different thread dont you think?

cavedave

If you wanted people to buy houses you would make renting more expensive.
If you wanted lower unemployment you would encourage renting as renting allows people easily move to where jobs are.
To prevent strikes you would want people to have large mortgages so they do not have the ability to risk not earning for a while.
Transient non settled workers do not want to buy. So if renting becomes more expensive they will move someplace they can earn more net. So removing rent supplement will encourage foreign workers and the young to emigrate.

What else does making renting harder do?

AARRRRGH

cavedave wrote: »

If you wanted people to buy houses you would make renting more expensive.
If you wanted lower unemployment you would encourage renting as renting allows people easily move to where jobs are.
To prevent strikes you would want people to have large mortgages so they do not have the ability to risk not earning for a while.
Transient non settled workers do not want to buy. So if renting becomes more expensive they will move someplace they can earn more net. So removing rent supplement will encourage foreign workers and the young to emigrate.

What else does making renting harder do?

I think you are exaggerating the the effect of removing a €400 tax credit there now.

nesf

AARRRRGH wrote: »

I think you are exaggerating the the effect of removing a €400 tax credit there now.

Indeed. It's probably one of the most undersubscribed tax reliefs. In all my years renting with people only a tiny, tiny fraction of them actually bothered to go out and claim it.

murphaph

AARRRRGH wrote: »

It wont be reduced any further as its a legitimate business expense. It probably shouldnt even have been reduced to 75%. It was just easy money at the time and a popular action to take. It cannot stand up to scrutiny at all.

But thats another argument for another thread anyway. I know the "hang the evil landlords brigade" will be on right away, but it would be better argued in a different thread dont you think?

Perhaps, I am one of those "evil landlords" though

I still believe it should be eliminated as a relief as it was one of the things that drove every tom dick and harry into believing they were some sort of property tycoon. If you can't make a profit from being a landlord without leveraging yourself into oblivion (based on getting 100% relief on mortgage interest paid) then you perhaps shouldn't be a landlord.

As for it being worthy of a seperate thread, I don't think so...all these rent reliefs, mortgage reliefs belong in the same category to me: easily gotten rid of tax breaks that should be looked at before more money is SPENT on creating new taxes (and with them new administration).

AARRRRGH

nesf wrote: »

Indeed. It's probably one of the most undersubscribed tax reliefs. In all my years renting with people only a tiny, tiny fraction of them actually bothered to go out and claim it.

Well then its a quick win to get rid of it. Little or no cost to implement and if anybody isnt bothered to claim it anyway, then it wont even effect them.

To be fair though, I dont know anybody renting who doesnt claim these credits.

murphaph

AARRRRGH wrote: »

Well then its a quick win to get rid of it. Little or no cost to implement and if anybody isnt bothered to claim it anyway, then it wont even effect them.

To be fair though, I dont know anybody renting who doesnt claim these credits.

They wouldn't abolish them if nobody was claiming them: that would be needless bad publicity. They must know it will bring in a fair few quid to scrap this relief.

AARRRRGH

murphaph wrote: »

Perhaps, I am one of those "evil landlords" though

I still believe it should be eliminated as a relief as it was one of the things that drove every tom dick and harry into believing they were some sort of property tycoon. If you can't make a profit from being a landlord without leveraging yourself into oblivion (based on getting 100% relief on mortgage interest paid) then you perhaps shouldn't be a landlord.

As for it being worthy of a seperate thread, I don't think so...all these rent reliefs, mortgage reliefs belong in the same category to me: easily gotten rid of tax breaks that should be looked at before more money is SPENT on creating new taxes (and with them new administration).

I wont argue with you on it then. Lets just say I dont believe it will be reduced further. In fact I believe it will be back up to 100% soon enough.

AARRRRGH

All but said straight out by Lenihan yesterday too.

http://www.independent.ie/business/irish/budget-to-focus-on-cuts-over-new-taxes-2262712.html

Nobody could be against this idea, unless they want more civil servants, more tax payers money spent on applying, collecting and enforcing a property tax. Its a quick win with little or no cost in its implementation.

cavedave

AARRRRGH

I think you are exaggerating the the effect of removing a €400 tax credit there now.

How so? I never tied these actions to just 400 increase in renting costs. I said increase in renting costs would encourage these outcomes. 400 increase could be the start of a greater increase.

gurramok

I claim it too. How much do they save by removing this relief?

Its only fair if Rent Supplement in the cities is properly reduced as well as rent is still crazily expensive for a single person.

RS from memory costs the taxpayer about half a billion, reducing this would save alot and in doing so helps reduce rents overall which helps reduce costs for the ordinary worker.(The govt controls 50% of the rental market)

127.0.0.1

Remove all subsidies and tax breaks, especially the property and horse related ones

it would most likely save more than 3 billion

AARRRRGH

127.0.0.1 wrote: »

Remove all subsidies and tax breaks, especially the property and horse related ones

it would most likely save more than 3 billion

I think you're right.

Id love to know exactly how much though.
They'll probably eventually remove all personal tax credits altogether too.

The_Honeybadger

AARRRRGH wrote: »

I think you're right.

Id love to know exactly how much though.
They'll probably eventually remove all personal tax credits altogether too.

If they remove all tax credits then it won't be worthwhile to work unless you are on very good wages, I'm not saying that they shouldn't do this, just that alot of people would probably not bother working at all if all of their income is taxed, or move into the black economy where possible (there is already alot of this going on). The difference between being on welfare and in low paid employment is already too small, so a different approach to social welfare would be needed to do something like this. The outrageous tax breaks that our wealthy have enjoyed over the past decade will probably be stopped too but this may be a case of shutting the stable door after the horse has bolted. Rent relief is a daft idea IMO, I have claimed it in the past but would do just fine without it at the same time, and i don't really see why it exists at all, one which I would like to see remain however is the tax relief on third level fees. Tax relief on pensions is another one that may be up for debate, given that we already have a pensions crisis looming it's hard to see how they will get away with removing this while at the same time telling us we all need to have private pensions. We do seem to have alot of tax reliefs, is this common throughout europe I wonder?

mickeyk

mickeyk wrote: »

Rent relief is a daft idea IMO, I have claimed it in the past but would do just fine without it at the same time, and i don't really see why it exists at all, one which I would like to see remain however is the tax relief on third level fees.

I thought the idea was that if you are giving owner occupiers and investors reliefs it is only fair to give one to renters.

Equally if the reliefs to owner occupiers and investors are being removed it is fair to remove the renters credit.

Why do you think relief on third level fees should be kept - what is so special about it?

The_Honeybadger

Deleted User wrote: »

I thought the idea was that if you are giving owner occupiers and investors reliefs it is only fair to give one to renters.

Equally if the reliefs to owner occupiers and investors are being removed it is fair to remove the renters credit.

Why do you think relief on third level fees should be kept - what is so special about it?

Yes I think they should all be removed, although I appreciate that this is not a good time to abolish mortgage interest relief as people are already struggling, it is being phased out in any case over the next 7 years, and I benefit to the tune of 400 pa from rent relief just to clarify my own situation. Third level tax reliefs should be left as I think people should be encouraged to pursue postgraduate qualifications while still working, and education is very much an investment in ones future earning potential and value to their employer. We are aiming for a smart economy after all

Sleepy

Relief for Education fees is about the only one of these reliefs I see the purpose to tbh.

The personal credits etc. always seemed like a needless means of over-complicating the tax system to me.

AARRRRGH

Sleepy wrote: »

The personal credits etc. always seemed like a needless means of over-complicating the tax system to me.

There will be tax credit cuts.

The result is that we pay more tax, but they can say "There will be no tax increases in the budget. The money will be found from cuts."

Spin at its best.

Sleepy

Just abolish the credits entirely tbh. A simplified tax system should lead to staff reductions in the Revenue Commissioners offices. These cost savings and the increased tax take from the removal of the tax credits could actually see an increase in tax revenues whilst "cutting" tax rates.