Buy-to-ley - balancing the books

crackcrack30

Rental income -.... 12*750 = e 9,000
Mortgage repayment -... 12*650 = e 7,800


Mortgage interest -....... e 5,500
Mortgage relief @ 75% = e 4,125

9,000 - 4,125 = e 4,875

Costs depreciation insurance & expences ect-... 2,500 (appx)

taxable income ...4,875 - 2,500 (expences) = 2375

tax , prsi , usc 2,375@ 50% = 1200 euro (odd)

nppr tax /tennency board ect ....300euro

Surplus to landlord 1200 - 300 (non claim taxes above) = 900.

**************************************

Do these figures and simple accountancy method & stack-up for returns ? have I forgot anything?? I will get an accountant btw


If the surplus to landlord ended up as a negative figure lets say -900 can it be carried forward to a future year and used to reduce a tax bill......


I'M considering a purchase but a very fine line between profit & loss having used a considerable cash deposit and with an uncertain rental/market future ect :rolleyes:

Mrs OBumble

crackcrack30 wrote: »

Rental income -.... 12*750 = e 9,000

I dunno about the rest, but this bit doesn't: you won't get occupancy all year. I think people advise estimating on 75-80%

jd

If you buy an apartment you'll have management charges.

crackcrack30

jd wrote: »

If you buy an apartment you'll have management charges.

House

crackcrack30

Mrs OBumble wrote: »

I dunno about the rest, but this bit doesn't: you won't get occupancy all year. I think people advise estimating on 75-80%

thanks for reply....

Do most landlords do returns on an accepted 11 month rental year?

Is it acceptable by the revenue to predict an 11 month occupancy in your tax returns every year regardless of actual occupancy....is this just something that would be uncovered in an audit and accepted by them as a hazard of the game, or would it have to be corrected with hindsight every year....?

indiewindy

Best practice as another poster wrote is to factor in 1 potential empty month per year. Banks are very strict on buy to lets and the percentage of the purchase price that you can borrow. You shouldnt need an accountant as it is pretty easy to file a tax return for investment properties

sunnysoutheast

crackcrack30 wrote: »

thanks for reply....

Do most landlords do returns on an accepted 11 month rental year?

Is it acceptable by the revenue to predict an 11 month occupancy in your tax returns every year regardless of actual occupancy....is this just something that would be uncovered in an audit and accepted by them as a hazard of the game, or would it have to be corrected with hindsight every year....?

Your tax return will be made in the October following the end of the previous tax year and thus will be based on income for that year. I understand that there are provisions made for the situation where o/s rent is not received or only recovered in later tax years but I have no direct experience.

The assumption of a void month etc. is used as a conservative measure when working out the investment case for a property rental.

sunnysoutheast

crackcrack30 wrote: »

If the surplus to landlord ended up as a negative figure lets say -900 can it be carried forward to a future year and used to reduce a tax bill......


I'M considering a purchase but a very fine line between profit & loss having used a considerable cash deposit and with an uncertain rental/market future ect :rolleyes:

Yes losses can be carried forward but they have to be originally claimed in the relevant year, it is not possible to claim after the event in subsequent years.

ted1

crackcrack30 wrote: »

thanks for reply....

Do most landlords do returns on an accepted 11 month rental year?

Is it acceptable by the revenue to predict an 11 month occupancy in your tax returns every year regardless of actual occupancy....is this just something that would be uncovered in an audit and accepted by them as a hazard of the game, or would it have to be corrected with hindsight every year....?

You don't predict rental income to revenue. You declare what you received, there not looking for next years budget, they want last years actual figures.

D3PO

lots of good info in this thread well done to all posters

murphaph

ted1 wrote: »

You don't predict rental income to revenue. You declare what you received, there not looking for next years budget, they want last years actual figures.

There is an element of prediction required for preliminary tax. The OP doesn't state if he's PAYE or not. If he is he can file his modest rental income (assuming the figures he gave are real) on a Form 12 and wouldn't be liable to pay preliminary tax but if he's not PAYE or a pensioner then he'll have to file a Form 11 and that means paying preliminary tax for current tax year along with balancing payment for previous tax year. Assuming a paper based return that means you have to predict as best you can your income for November and December coming. Having said that, there are 2 allowed rules of thumb, either you pay 90% of your anticipated liability for current tax year or pay 100% of what you were liable for the previous year. Using the 100% is fool proof obviously, but costs you lost interest potentially.

crackcrack30

thanks guys,

Yes I am PAYE earner......

Does my basic breakdown of costs / out goings look right.....&

What would be the average expences cost for a 3/4 bed semi d rental property??

Somewhere in the region of ........

D3PO

crackcrack30 wrote: »

thanks guys,

Yes I am PAYE earner......

Does my basic breakdown of costs / out goings look right.....&

What would be the average expences cost for a 3/4 bed semi d rental property??

Somewhere in the region of ........

looks ok in general yes obviously the big missing point is how much your investing to get a potential 900 euro return.

crackcrack30

Looking at a mortgage of 100k using personal savings of between 30-40k

Valentine1

The expectation is that a lot of BTLs will come on the market in the next 6 months or so following repossessions etc. Buckets of them are with recievers already so if I were in your position I would hold off a little while to see what happens to the market.

D3PO

crackcrack30 wrote: »

Looking at a mortgage of 100k using personal savings of between 30-40k

so lets assume 30k investment your end. That's only a 3% return (and likely less as that's you calculating for full occupancy whereas you should be calculating off 11 months.

It you forget about potential capital appreciation that's not a very attractive investment TBH especially when the threat of the removal of interest as a deductible looms.

Id have a serious think about it based on your high level figures. There are far better investment's for 30k with greater returns and less hassle.

D3PO

crackcrack30 wrote: »

Looking at a mortgage of 100k using personal savings of between 30-40k

so lets assume 30k investment your end. That's only a 3% return (and likely less as that's you calculating for full occupancy whereas you should be calculating off 11 months.

It you forget about potential capital appreciation that's not a very attractive investment TBH especially when the threat of the removal of interest as a deductible looms.

Id have a serious think about it based on your high level figures. There are far better investment's for 30k with greater returns and less hassle.

D3PO

oops should have paid more attention didn't realise the 900 was a surplus after the mortgage I assumed it was just the profit after tax.

my bad ignore the above post

crackcrack30

Was looking at it as a long term investment, the area is a good mix of res and rental close to employment schools and retail....

Was hoping that it would amount to a pension property and cover its own expence without requiring subsidy on my end.....yes the deductible interest loss would be a concern but I think its unlikely as (A) its a business expence and (b) property owners are already just hanging on , why push them over the edge in an economy that's so fragile...?

sunnysoutheast

crackcrack30 wrote: »

Rental income -.... 12*750 = e 9,000
Mortgage repayment -... 12*650 = e 7,800


Mortgage interest -....... e 5,500
Mortgage relief @ 75% = e 4,125

9,000 - 4,125 = e 4,875

Costs depreciation insurance & expences ect-... 2,500 (appx)

taxable income ...4,875 - 2,500 (expences) = 2375

tax , prsi , usc 2,375@ 50% = 1200 euro (odd)

nppr tax /tennency board ect ....300euro

Surplus to landlord 1200 - 300 (non claim taxes above) = 900.

**************************************

Do these figures and simple accountancy method & stack-up for returns ? have I forgot anything?? I will get an accountant btw


If the surplus to landlord ended up as a negative figure lets say -900 can it be carried forward to a future year and used to reduce a tax bill......


I'M considering a purchase but a very fine line between profit & loss having used a considerable cash deposit and with an uncertain rental/market future ect :rolleyes:

PRTB fee is claimable. No NPPR after this year. LPT is not yet confirmed claimable, seems that accountants won't claim it but people preparing their own returns often will and wait for the Revenue to challenge.

USC is charged on the interim net income before deduction of capital allowances (alas).

If you are any good with a spreadsheet lay it all out and work out your net surplus/deficit from the rental activity, and then your own personal financial position e.g. including the mortgage capital repayments etc. plus any real cash money you have to pay out every year.