Taxing losses - Pushing people over the Edge

rodento

So I'm struggling to pay a mortgage and an forced out let the property out to help pay mortgage. Is the current policy to tax rent even if it doesn't cover the cost of the mortgage:eek:

God help us

ntlbell

rodento wrote: »

So I'm struggling to pay a mortgage and an forced out let the property out to help pay mortgage. Is the current policy to tax rent even if it doesn't cover the cost of the mortgage:eek:

God help us

Sounds like a bad business idea.

If you are renting out a room there is the rent a room allowance thing, if the property is rented out fully the rental income minus expenses is taxed, some of the interest on the mortgage is an expense.

Scofflaw

rodento wrote: »

So I'm struggling to pay a mortgage and an forced out let the property out to help pay mortgage. Is the current policy to tax rent even if it doesn't cover the cost of the mortgage:eek:

God help us

What's bizarre about it? You're gaining an income from a property, which you're using to buy the property (well, pay off the mortgage on it, but same thing). At the end of it, you have a property which you've bought out of rental income. How is that odd?

puzzled,
Scofflaw

rodento

Your taxing people forced out of their homes, trying to pay off the banks and the government is taxing you even though your not even covering the cost of the mortgage:rolleyes:

Guess its the governments idea of a bail out

liammur

rodento wrote: »

Your taxing people forced out of their homes, trying to pay off the banks and the government is taxing you even though your not even covering the cost of the mortgage:rolleyes:

Guess its the governments idea of a bail out

Anyone in serious neg equity should just give back the keys. It's not what the government wants to hear, but they're planning on burning bondholders, so why not ordinary people burn them,,,,it's business after all.

avalon68

rodento wrote: »

Your taxing people forced out of their homes, trying to pay off the banks and the government is taxing you even though your not even covering the cost of the mortgage:rolleyes:

Guess its the governments idea of a bail out

Not sure I follow your logic here - rent is income, income is taxable....your debts are irrelevant in this situation......otherwise why would anyone pay tax......sure that tax money could pay off my car, horse, world trip, time machine.....

c montgomery

While i sympathise with your situation there's not much you can do or expect to be done about it.

I lost money on shares, about 70% however i still have to pay tax on the dividend i receive from them.

I hope your situation improves for you as its not a nice position to be in.

whippet

easy solution to not paying the tax .. don't rent it out !

Rental income is exactly that 'income' .. therefore taxable.

Bullseye1

What's the maximum you can earn via renting out rooms while still living in house before you start paying tax? I thought I read €7,000 somewhere.

rodento

Thankfully for me its a case of hypothetically speaking, but kinda stunned it exists

Scofflaw

rodento wrote: »

Your taxing people forced out of their homes, trying to pay off the banks and the government is taxing you even though your not even covering the cost of the mortgage:rolleyes:

Guess its the governments idea of a bail out

I admit to having a lot of difficulty seeing why anyone is in any way surprised by this. As avalon68 says, it's an income stream, and income is taxable. That's that, full stop.

I'm self-employed. If I make a profit, I pay tax on it. If the amount remaining after I've paid tax is insufficient to pay my personal bills, I'm in the wrong business, or not trying hard enough - if I go back to the Revenue and say "look, the profit doesn't cover my personal expenditure, can I have a rebate?", they will patiently explain to me that that's not how taxation works, and that I have to make enough money to cover both my tax bill and my personal expenditure. Doing that is nobody's problem but mine.

You're in exactly the same position. You have an income stream, on which you're taxed. If the income stream doesn't cover what you want to spend it on for your personal benefit - buying a property, in this case - that's nobody's problem but yours. It's income, it's taxable. If you can't make it cover the mortgage after tax, then you have to pay some of the mortgage on your property from other sources - and if you can't afford to do that, you can't afford the property.

To refer back to what you're claiming in the title - you're not being taxed on a loss. That would only be the case if the property had been bought through a business whose sole income stream then consisted of renting out the property. If that were the case, then the business would be making a loss, and would not, therefore, be liable to any profit tax. If, however, it had any other income, and overall made a profit, then it would be taxed on that profit even though it was losing money on the property. From what you've said that's not the case - you own the property personally, right? So the income from the rent can only have any expenses associated with the rent set off before tax - the rest is profit. Sure, it's profit that doesn't cover what you want to do with it, but that doesn't matter.

It's income = it's taxable. It's irrelevant what you plan to do with it. It's pretty straightforward, surely?

still puzzled,
Scofflaw

K-9

AFAIK, if the property is registered with the PRTB you can claim loan interest which could well mean a loss and no profit. Offsetting that loss against other income would be a different thing.

I can't imagine many new landlords from the last few years making a profit to be taxed on.

Cookie_Monster

rodento wrote: »

So I'm struggling to pay a mortgage and an forced out let the property out to help pay mortgage. Is the current policy to tax rent even if it doesn't cover the cost of the mortgage:eek:

God help us

it's not the revenues fault that you income cannot cover your expenses. Income is taxed, be it rent, wages or whatever.

Either get out of the business or increase you income, or lower your costs, none are pleasant or easy options but hat's business...

Remember you're also obliged to pay tax on your wages which you use to cover the mortgage, is that also unfair?

WalterMitty

This isnt income in a business sense , its revenue. can you not transfer the property and borrowings to a LTD company ,pay interest only and be able to avoid being taxed on a loss?
Do pension companies who own property like office blocks pay tax on the rent, or is it on the profits after deducting interest?

ArphaRima

Anyone in serious neg equity should just give back the keys. It's not what the government wants to hear, but they're planning on burning bondholders, so why not ordinary people burn them,,,,it's business after all.

Yes and it's only right for the law to come down on that person for the debt they owe. That way they can take responsibility for their own loss.