The costs of being a landlord

Victor

This thread is mostly for landlords, to help those considering becoming a landlord.

Anyone can post, but it should be from the point of view of helping those prospective landlords in coming to their decision.

Moderator

---

I would be grateful if people could list the costs they are aware of.

Not all costs are financial, some are a matter of time and others, like stress, are somewhat intangible.

As things go on, I will edit the second post to try to make a comprehensive list

Victor

Tangible costs:
Purchase of property.
Stamp duty and/or VAT.
Building regulation, fire safety and other improvements.
Purchase of furniture, appliances, fixtures and fittings.
Mortgage capital - note that this is a repayment, not a current expense. Rules apply.
Mortgage interest - note that only part of mortgage interest is an expense for tax purposes.
Other banking fees (cheque books, current account fees, overdraft facilities, etc.)
Block maintenance fees (for apartments and managed developments).
Insurances.
Solicitor fees for purchase, letting, sale and problems.
Accountant fees for tax returns and tax management.
Letting and advertising fees.
Renewal and management of leases.
Private Residential Tenancies Board registration fees.
Local Property Tax (residential) or Rates (commercial).
Annual gas appliance servicing.
Periodic inspections of electrical and plumbing systems.
Maintenance and repairs.
Cleaning and maintenance of common and external areas.
Cleaning and maintenance between tenants.
Re-decoration.
Depreciation / periodic renewals for furniture, fittings and structure.
Utilities - phone, internet, Cable TV, bins, electricity, water, gas, etc. especially for common areas.
Security systems.
Vacant periods.
Bad debts.
Income tax, PRSI, USC.
Capital Gains Tax.
Capital Acquisitions Tax.
Other taxes.
Foreign exchange risk.

Intangible costs:
Time for collecting / administering rents.
Time in showing properties and dealing with lettings.
Dealing with tenant issues.
Dealing with problem tenants.
Bad tenants.
Being phoned at 3am by some half-drunk character.

murphaph

PRTB fees
Property tax
Regular gas appliance servicing
Legal fees when things go south

kennyb3

The most obvious one's people forget to account for when doing their sums is the cost of vacant periods and the cost of renewing appliances/proper maintenance (not the day to day stuff). You often see landlords factor in the capital allowances tax saving but not account for the actual cost on the expenditure side. And many don't seem to budget for a property overhaul every 10-15 years.

pwurple

Tangible:

- Maintenance and upkeep costs
- mortgage
- block management fees (for apt or new developments)
- income tax
- PRSI
- USC
- PRTB
- Property Tax (LPT) for domestic or rates for commercial
- stamp duty
- vacancy
- furniture, appliances, fixtures and fittings
- depreciation
- accountant fees
- solicitor fees
- other professional fees for repairs (electrician, plumber, structural engineer)
- advertising fees
- banking facility fees (cheque books, current account fees, overdraft facilities etc)

(optional are utilities that you may include like internet, bins, electricity, water, security, gas etc)

Intangible
- Being phoned at 3am by some half-drunk idiot.
- Rent collection
- Dealing with problem tenants
- Damage repair
- renewal and management of leases

Santa Cruz

Check out Irish landlord.com website. Loads of answers to your question there

Victor

Thanks folks, post 2 edited above. Any more?

garhjw

In the case of older buildings, upgrade works in relation to fire safety regulations both in apartments and common areas. (My father is currently upgrading 2 Georgian townhouses in dublin) . This is very costly

Moonbeam

Alot of people do not know that only 75% of mortgage interest paid on a residential property is allowable as a tax deduction against rental income.
So if your mortgage is 1000 and you get 1200 for your house and expenses for the year are 3000,you still have a massive tax bill even though you made a loss over all.
The worst part of renting the house out is the massive tax bill.

Trying for aifnd a link with a good example but here is an example - http://www.paylesstax.ie/103-Property-Investors---Tax-on-Rental-Income-How-to-Calculate-Your-Rental-Income

The_Conductor

Moonbeam wrote: »

Alot of people do not know that only 75% of mortgage interest paid on a residential property is allowable as a tax deduction against rental income.
So if your mortgage is 1000 and you get 1200 for your house and expenses for the year are 3000,you still have a massive tax bill even though you made a loss over all.
The worst part of renting the house out is the massive tax bill.

Trying for aifnd a link with a good example but here is an example - http://www.paylesstax.ie/103-Property-Investors---Tax-on-Rental-Income-How-to-Calculate-Your-Rental-Income

I have to echo this- a lot of amateur landlords, and indeed tenants- think that just because the rent is more than the headline mortgage being paid on a particular property- that the landlord is making a profit and/or that the rent is covering the mortgage- when very very often, neither is the case.......

Victor

What is the current position for capital allowances for (a) residential and (b) commercial property?

riclad

Many landlords , pay extra insurance,
public liability insurance,
in case someone has an accident in the rental house,
apartment.
MOST are paying extra interest,
because they have an investment mortgage,
as opposed to a standard variable rate mortgage.
MANY landlords make a tiny profit,
per year,
maybe a few hundred euro,s.


BUT with negative equity ,
they cant afford to sell up ,
ie they are reluctant landlords.

PEOPLE assume landlords are all well off,

YOUR tax bill on rental income, will be zero,


if your rental income, is less than 75 per cent of loan interest,
plus insurance, maintenance ,other allowable expenses on the rental unit.

BUT the government can change or drop tax allowances ,
if future budgets,if they want .