Why I'm taking my rental off the market

theboringfox

4ensic15 wrote: »

A consensus means that everyone agrees. I don't agree with it and I am not alone. Not allowing interest write off would mean less investment. When interest write off was removed from residential lettings 20 years ago rents almost doubled in about 6 months. It wasn't long being restored.

Agree. And I will add to it that it should be 100% as I agree with the poster pointing out it is a cost. I say this as someone with no investment property and am a PAYE tax payer. We won't fix housing if focus is on everyone owning own home. Need to have investment in rental properties and to encourage people in. The amount of red tape being put on landlords means only large investors can deal with it. These investors are not enough to bridge the gap. Government does not have the capacity. Need the Joe public to be attracted to investing in a rental maybe as his or her pension.

Browney7

theboringfox wrote: »

Agree. And I will add to it that it should be 100% as I agree with the poster pointing out it is a cost. I say this as someone with no investment property and am a PAYE tax payer. We won't fix housing if focus is on everyone owning own home. Need to have investment in rental properties and to encourage people in. The amount of red tape being put on landlords means only large investors can deal with it. These investors are not enough to bridge the gap. Government does not have the capacity. Need the Joe public to be attracted to investing in a rental maybe as his or her pension.

At the same time, we don't need 1000s of people with no clue becoming "investors" just to keep up with the Jones' which fuels a property credit fuelled boom requiring a 60 billion taxpayer bailout when it goes to pot - there's a balance needed!

The_Conductor

Marlowe Yummy Louse wrote: »

Consensus? I’d imagine be very very few people people would agree with that. It would make operating a business, investing in a business far far less attractive and increased costs on basically every business in the country. It would be a crazy move.

It would also mean there was an active incentive or imperative- to pay down debt in as orderly a manner as possible.

At the moment- if a landlord (or a business owner) pays down debt- they are actively discriminated against by the tax system- as their neighbouring competitor- gets an inducement to maximise their debt on a property........

The discussion (on the Economist) is that debt, in general (not necessarily related to housing- across the board- and in an international context- not in a given country)- should not be allowed to function as a cost base against which tax could be written off.

If you consider that there should be some sort of a recognition of prudence- and a premia associated with paying down debt- then it makes a lot of sense. Those who inherit businesses (or property) and are debt free (or only have modest debts) should in a similar manner- have recognition of this status.

At the moment- there is no imperative to repay debt, in fact there is an actual disincentive to do so- and if you look at a lot of failures on the international scene- many of them are to do with businesses deliberately saddling themselves with improbable quantities of debt (think Toys-r-Us for example)- to the extent that vulture funds actually account for servicing debt as an asset in their balance sheets (and indeed- in an Irish context- wheezes like the Ontario Teacher's Pension Fund- who bought the National Lottery- and lent the Irish entity they created to hold the lottery the entirety of the purchase price in cash @ an interest rate of 15%- just so it would never ever be likely to be profitable- and thus not have any tax to pay in this jurisdiction- it becomes very obvious- very quickly- just how debt can be abused to the detriment of the ordinary taxpayers of a country.........). If you another local example- Eircom is hard to ignore..........

Debt- and the ability to use the cost of debt to minimise the 'profit' a business makes- means even perfectly viable businesses can be driven up the wall (esp. when you have predatory groups like Blackrock involved).

In the context of residential property- there quite simply is no imperative to repay debt- and last time round- the largest group of delinquint mortgages were those held by buy-to-let landlords..........

There is so much wrong in the sector- however, the manner in which different actors in the sector can get away with manipulating the tax code to their benefit- when other actors in the sector are specifically excluded from using similar mechanisms- is an inequity- and is discriminatory.

As it stands- I would suggest that a straight cut of the gross rent as a 'tax' on the sector- possibly mirroring the 20% witholding tax rate- would be the most fair and equitable manner of creating a level playing field- and removing all costs from the equation- you can do whatever the hell you like with the remainder- after you pay the 20% of gross (or whatever level)- there is no corporation tax rates, avoidance, evasion or any other shenanigans- its a straight 20% cut- the end. Sometimes the simple solutions- actually work- however, the vested interests (such as the REITs) would scream blue murder if something like that was suggested by officialdom.

AndrewJRenko

The_Conductor wrote: »

It would also mean there was an active incentive or imperative- to pay down debt in as orderly a manner as possible.

At the moment- if a landlord (or a business owner) pays down debt- they are actively discriminated against by the tax system- as their neighbouring competitor- gets an inducement to maximise their debt on a property........

The discussion (on the Economist) is that debt, in general (not necessarily related to housing- across the board- and in an international context- not in a given country)- should not be allowed to function as a cost base against which tax could be written off.

If you consider that there should be some sort of a recognition of prudence- and a premia associated with paying down debt- then it makes a lot of sense. Those who inherit businesses (or property) and are debt free (or only have modest debts) should in a similar manner- have recognition of this status.

At the moment- there is no imperative to repay debt, in fact there is an actual disincentive to do so-

This is an important point and often missed. The allowance of interest against tax should be based on a standard 20-year repayment schedule or equivalent. It shouldn't be possible to go interest-only to maximise tax relief on interest for ever.

Marcusm

The_Conductor wrote: »

There is a perverse incentive to maintain debt in any business- as the bulk (or even all) of the cost of the debt- is a tax deductible cost.
This is a noose around the necks of taxpayers in every country- who are subsidising the risk associated with other people's gambling- which includes anyone who loads debt onto a business of any type whatsoever.

Even the Economist and other rightwing publications- argue convincingly- that debt should not be a tax deductible cost- however, it is the international norm- and until there is a concerted effort to reform tax internationally- we're stuck with the system we have.

Referring to The Economist as a right wing publication shows the shallowness of your analysis. Additionally, to the extent that the us a consensus on the tax treatment of interest and funding costs might best be illustrated by the OECD Base Erosion & Prifit Shifting project which mandates a move to a fixed ratio interestcdeductibility limitation of 30% of EBITDA to prevent debt being used artificially. There is certainly no governmental consensus to eliminate the tax deductibility if debt per se. From an economist’s perspective, there is often a discussion of levelling the playing field with other investment forms.

garhjw

Seeing the state of some of those protestors yesterday would be enough to convince anyone to take their rental off the market. Disgraceful behaviour. If you are going to protest march to the Dail, don’t stop people getting to WORK or block emergency vehicles.

average_runner

OP, air bnb is a good bet. I know our neighbours do it with their rentals, less hassle with tenants etc.

GGTrek

garhjw wrote: »

Seeing the state of some of those protestors yesterday would be enough to convince anyone to take their rental off the market. Disgraceful behaviour. If you are going to protest march to the Dail, don’t stop people getting to WORK or block emergency vehicles.

Many are middle class Uni students with no accommodation problem at all, almost no real homeless people at the protest.
Probably a few of them want to start a political career on this subject like this lad here:  President of the Graduate Students’ Union (GSU), Oisín Vince Coulter (speaking for Take Back The City)
http://www.thejournal.ie/take-back-the-city-explainer-4242067-Sep2018/
http://www.universitytimes.ie/2018/09/students-join-hundreds-to-halt-traffic-in-housing-protest/

Topgear on Dave

GGTrek wrote: »

Many are middle class Uni students with no accommodation problem at all, almost no real homeless people at the protest.
Probably a few of them want to start a political career on this subject like this lad here:  President of the Graduate Students’ Union (GSU), Oisín Vince Coulter (speaking for Take Back The City)

I would agree that there are a few political opportunists with few solutions and looking to make their names from the protest.

But there has been a huge rise in rental costs and that is a fact, and its younger people, poorer people and students getting squeezed by it.

Fol20

Topgear on Dave wrote: »

I would agree that there are a few political opportunists with few solutions and looking to make their names from the protest.

But there has been a huge rise in rental costs and that is a fact, and its younger people, poorer people and students getting squeezed by it.

Your right. The only way however to resolve the issue is to increase supply. It’s basic economics and the more the government try to pressure ll, the more the supply will be constrained. The government are all about making it seem like they are doing something however the stats indicate otherwise.