I'm a landlord now - advice needed

AG918

Hi all, looking for some advice regarding a situation with a property I own. Some background:

My mother died when I was young and her house was left to myself and my brother. When we turned 18 we became the legal owners of the home (I'm 25 now).

At the moment, a family is living in the house and they are paying rent of ~€1100 each month. My father acts as a landlord and the rent is paid directly into his bank account.

Myself and my brother are currently renting separately. My rent is €500 p/m. His rent is €400 p/m. The rent from my mothers house is covering our rents so to speak. My father pays our rents to our landlord directly each month (they are friends). My father pockets the remaining ~€200 p/m.

My father has now made it clear that he wants nothing more to do with the property. I talked to him about exactly what he wants us to do and the jist of it is that I should go to the house, introduce myself to the tenants and tell them that the rent is to be paid into my account from now on and that any problems should be directed to myself and my brother.

I take it that it is not as simple as that. What steps should I take in this situation? Is there anything I should be aware of?

Any advice appreciated.

TheDriver

It could be as easy as that in relation to relationships with tenants.
BUT it sounds like there is tax implications etc not being dealt with. Ye are the owners so ye should have this sorted even if its dad looks after it. Are the tenancies registered??

athtrasna

AG918 wrote: »

Hi all, looking for some advice regarding a situation with a property I own. Some background:

My mother died when I was young and her house was left to myself and my brother. When we turned 18 we became the legal owners of the home (I'm 25 now).

At the moment, a family is living in the house and they are paying rent of ~€1100 each month. My father acts as a landlord and the rent is paid directly into his bank account.

Myself and my brother are currently renting separately. My rent is €500 p/m. His rent is €400 p/m. The rent from my mothers house is covering our rents so to speak. My father pays our rents to our landlord directly each month (they are friends). My father pockets the remaining ~€200 p/m.

My father has now made it clear that he wants nothing more to do with the property. I talked to him about exactly what he wants us to do and the jist of it is that I should go to the house, introduce myself to the tenants and tell them that the rent is to be paid into my account from now on and that any problems should be directed to myself and my brother.

I take it that it is not as simple as that. What steps should I take in this situation? Is there anything I should be aware of?

Any advice appreciated.

For starters you need to get this above board. The way you describe the money being divided means you're not paying the tax you're legally obliged to pay. Are you registered with the Prtb?
Your Dad is wise to get out, if he was audited by Revenue he would be facing a tax bill as he was the one in receipt of the rent.

Put yourself in the tenants shoes, a stranger turns up at the door, says he's your landlord now and the money goes to his account. Would you do that? You need to prove to the tenants that you are who you are and you need to provide them with your contact details.

What kind of lease do your tenants have?

The_Morrigan

OP in this instance I'd be advising you to get some professional advice as yourself and your brother a the legal owners you need legal & tax advice on how to deal with the situation.
You have property related taxes to pay; annual tax returns on the income received; landlord insurance, PRTB registrations. It isn't a case that you just collect the rent.

odds_on

The_Morrigan wrote: »

OP in this instance I'd be advising you to get some professional advice as yourself and your brother a the legal owners you need legal & tax advice on how to deal with the situation.
You have property related taxes to pay; annual tax returns on the income received; landlord insurance, PRTB registrations. It isn't a case that you just collect the rent.

Not forgetting the non PPR tax if that has not been paid. That could well cost over 3k (with interest and late payment charges) if it has never been paid.

AG918

Just to be clear all relevant taxes are in order and have been paid, the property tax was paid within the last few months.

My income tax returns over the years have always included the rent received from the property.

The tenancy is registered, it was let by an agency around 18 months ago IIRC.

Sorry about the lack of details.

Santa Cruz

If there is a lease in place I would advise letting things sit until it's expiry. Then sign a new lease with the arrangement that the rent is paid in to your account. You can have an arrangement that your brothers share is transferred to his account each month.
I would advise for a start getting an accountant to manage your tax affairs. Have a look at Irish landlord.com website. There are many useful tips there for landlords including advice as top reducing your tax liabilities. Keep receipts of every expenditure involved with the house such as insurance, PRTB costs, repairs etc.

To have such an asset at aged 25 is fantastic and if managed properly will be of immense benefit to you.

AG918

Santa Cruz wrote: »

If there is a lease in place I would advise letting things sit until it's expiry. Then sign a new lease with the arrangement that the rent is paid in to your account. You can have an arrangement that your brothers share is transferred to his account each month.
I would advise for a start getting an accountant to manage your tax affairs. Have a look at Irish landlord.com website. There are many useful tips there for landlords including advice as top reducing your tax liabilities. Keep receipts of every expenditure involved with the house such as insurance, PRTB costs, repairs etc.

To have such an asset at aged 25 is fantastic and if managed properly will be of immense benefit to you.

Thanks, just had a look at the site and it's very helpful. This is all new to me and at the moment I feel a bit out of my depth. If this has to be done I want to do it right and avoid making any mistakes.

odds_on

AG918 wrote: »

Thanks, just had a look at the site and it's very helpful. This is all new to me and at the moment I feel a bit out of my depth. If this has to be done I want to do it right and avoid making any mistakes.

Download, read and inwardly digest the Residential Tenancies Act 2004.

quietsailor

You are doing the right thing by asking for advice on what to do.

Because you've all been paying the taxes to date it should have minimal financial trouble for you.

You'll need to get to grips with the residential tenancies act. It's bloody awful language to understand but bear with it and you'll understand it.

Only piece of advice I might add to the good advice above is to keep the rental EVERYTHING separate to your personal business:
separate bank account for rent in and expenses out - mortgage, expenses, taxes, charges etc.

keep all paperwork in one place away from personal matters, maybe have a box you can dump the paperwork in and sort when you get time.

Mrs OBumble

AG918 wrote: »

Just to be clear all relevant taxes are in order and have been paid, the property tax was paid within the last few months.

My income tax returns over the years have always included the rent received from the property.

The tenancy is registered, it was let by an agency around 18 months ago IIRC.

Sorry about the lack of details.

OP, an alternative suggestion for you.

As the taxes etc are all in order, then effectively your father has been acting as a property manager for you. When you say that he "pockets" the difference, it's more like this is what he has been paid for doing the PM, and also doing some book-keeping work for you.

As he doesn't want to do this, one option is your you and your brother to engage a professional property manager to look after things for you instead. This will cost you a bit less each month than your father has been taking - but you will have to do a little more of your own financial management, ie paying your own rent.

This could be one way of making things a bit smoother for all concerned - it will be confusing for the tenants for both you and your brother to now jointly be the "landlord".

If you're doing to go down this road, then I would suggest finding a company that specialise in managing rented residential properties. Don't just just an estate-agent who does some rental on the side - they usually do a bad job of managing the rentals.

As above letting agent is the way to go, after reading the OP I thought perhaps there was potential for NPPR, property tax, income tax etc issues but as its squeaky clean there is no issue. However as the tenants are in situ I would expect the fee to be half of that of a letting agents usual.

AG918

Thanks everyone, all the advice has been very helpful. I have the tenancies act downloaded so will have a read of it, hopefully everything will go smoothly with no issues.