Is nobody concerned at all about the amount that the government gets from their rent?

kurtainsider

Quiet please wrote: »

37% of Fine Gael tds ARE landlords.

And 63% AREN'T landlords. Were you attempting a make point perhaps?

Pkiernan

Geuze wrote: »

Bear in mind that tax is not paid on the gross rent.

Tax is paid on the net rental profits, which is often way, way less than the gross rental income.

Please explain how it is way way less.
There are some deductions but not many.

Senature

Landlords pay the same tax rates as any other individual in the state. There are very few things that are not deductible expenses, but should be, such as property tax.
Please can the landlords here explain what is apparently so unfair/wrong about this.

pwurple

I have a business... a small shop. I have a business loan on it. The interest on that loan is an expense of running business, I can deduct that from the profit calculation.

I have a flat rented out, also with a loan... a mortgage. I can’t deduct that interest from the profit calculation.

Different rules. = not fair.



Massive corporation has apartment complex with loans. Writes off all the interest, doesn’t pay PRSI, USC etc. pays corporate tax rate instead of income tax.


Different rules = Not fair.

. They also put in rules to penalize landlords for reducing the rent (rent pressure zone anyone).

It’s death by a thousand cuts. Loads of little tweaks that keep having the effect of raising rents.

Pkiernan

Senature wrote: »

Landlords pay the same tax rates as any other individual in the state. There are very few things that are not deductible expenses, but should be, such as property tax.
Please can the landlords here explain what is apparently so unfair/wrong about this.

Why does rent attract PRSI? The government doesn't give the landlord any welfare when the dwelling can't be rented.

Why is interest earned on saving taxed lower than income tax?
Why is CGT lower than income tax?

Why aren't earnings from gambling taxed?

lawred2

LotharIngum wrote: »

IT just struck me about all the anti landlord stuff going around.
Nobody is at all p1ssed at the government for the sheer amount they take from the rent you pay to your landlord.
Over 50%.
Imagine if the government were to forego that tax in return for the landlord reducing the rent.

But think about it folks. Over 50% of what you are paying is going to the government, so they are actually more to blame for your high rent thatn your landlord is.

If they really want to reduce rents, they should think about using a carrot approach and fessing up to how much they are contributing to high rent.

Stick approaches have failed miserably and always will.

You don't think people should pay income tax on income?

Why would that be?

I mean I don't disagree that 52% of my bonus going to the government is stomach churning but why should rental income be treated any differently?

(I would expect that very few if any landlords are paying over 50% combined taxes on rental income)

angel eyes 2012

Ronaldinho wrote: »

And how do you propose to fill the hole in Govt's tax take that your plan will result in?

I am not convinced that everyone pays the correct level of income tax on rental income. A colleague in work with an apartment let out is deducting the cost of the entire monthly mortgage payment when completing his return. When I suggested that he should seek advice on the matter in case of revenue audit etc. he didn't want to hear. I think this is an area that Revenue could be more proactive about as there are is a good cohort of landlords out there that are either under-declaring or not declaring at all.

Another area the Government could clean up on is medical card fraud. 44% of the population are in receipt of one. A couple on my parents' road have one each, drive a Merc, have a long held rental property in Dublin and have a holiday home in the Canaries that they rent out. Neither have serious illness and having a chronic illness does not entitle you to a medical card anyway, it's based on income. I'm not naive though, I understand this is not an appealling area to tackle for politicians in respect of votes.

Senature

Most of the mortgage interest is deductible against tax, I agree this should be the same across the board for all business types, but to say mortgage interest is not deductible is incorrect and misleading.
I am soon to be self-employed. I will pay PAYE, PRSI, USC on the profits made on the service I provide. A corporation providing the same service does not pay the same taxes, they pay corporation tax. I can set up a ltd company and do the same if I wish, but all things considered, I am likely to be better off remaining as simply self-employed. My expenses will be low, so not much to deduct from income before it is taxable. I don't see why that should be different for landlords.
The tax rate on interest earned on savings has only been lowered in the last couple of years, and only by a few measly percent. Given the trouble people got into by not having cash reserves, including the problems in the banking system, it would seem prudent to me that cash savings be incentivised to some extent.
I don't understand the point re PRSI. If your income is low enough, the government will provide you with welfare assistance, and you will get a state pension etc.
I know nothing about taxation rules of earnings from gambling, don't see how that's particularly relevant to this thread.

Having said all that, I agree landlords face many difficulties. The rules around the rent pressure zones for example are well meaning but very poorly thought out and obviously a total failure in terms of what they were trying to achieve. Also there are massive problems with delays of removal of non paying tenants, or those who cause property damage. That landlords are left footing the entire bill for the above with no real avenue for compensation is not right at all.

However, this thread is about the tax payable on rental income, and I don't see the argument for it to be treated differently than other income.

Old diesel

lawred2 wrote: »

You don't think people should pay income tax on income?

Why would that be?

I mean I don't disagree that 52% of my bonus going to the government is stomach churning but why should rental income be treated any differently?

(I would expect that very few if any landlords are paying over 50% combined taxes on rental income)

There is a massive difference between income tax of 50 percent and paying zero.

Corporation tax for example is 12.5 percent.

It's a lot less then 50 percent but is justified on basis of creating jobs.

In a rental shortage then it seems prudent to remove barriers to investment OR staying in the sector.

If you are the government and you are losing landlords everyday and people become homeless as a result and you are going to pay 5 grand a month to a hotel per family then you mIght listen to the guy who could continue suppling you a far more suitable solution at 1500 to 2 k a month when he cites tax as an issue for him leaving the market.

Ditto how we handle bad tenants - a fair system shouldnt take a year or more.

Ditto supports in upgrading properties to hit some standard YOU the Govt thinks is needed.

4ensic15

Pkiernan wrote: »

Why does rent attract PRSI?

To raise money.

Pkiernan wrote: »

Why is interest earned on saving taxed lower than income tax?

It is not.

Pkiernan wrote: »

Why is CGT lower than income tax?

When CGT was higher people didn't realise gains, which lowered the revenue from CGT and acted as an inhibition to investment.

Pkiernan wrote: »

Why aren't earnings from gambling taxed?

Because people would have to be allowed for losses on gambling if profits were taxed. More money is lost on gambling than won.

Senature

If landlords are selling up for any reason, the property is then available to be used for housing, so I don't see how this contributes to homelessness. Properties that have changed use to short term lets and or are being left vacant are definitely increasing homelessness. Personally, I totally understand why landlords would choose short term letting or vacancy under the current circumstances, but I don't think it should be allowed. Properties are originally given planning permission to provide a function, they should be fulfilling it.

Still not understanding why the tax rate is the problem. Have landlords not always paid approximately this level of tax? Why is it suddenly a problem now?

Sleeper12

LotharIngum wrote: »

IT just struck me about all the anti landlord stuff going around.
Nobody is at all p1ssed at the government for the sheer amount they take from the rent you pay to your landlord.
Over 50%.
Imagine if the government were to forego that tax in return for the landlord reducing the rent.

But think about it folks. Over 50% of what you are paying is going to the government, so they are actually more to blame for your high rent thatn your landlord is.

If they really want to reduce rents, they should think about using a carrot approach and fessing up to how much they are contributing to high rent.

Stick approaches have failed miserably and always will.

Many landlords will be happy for you to believe that the government tax all of your rent but this simply is not true. Your landlord only pay tax on the profit after expenses



Here's an example given by a landlord on another thread:

Ill give an example
Rent 1500
Mortgage(interest only part) 700
Maintenance +misc @20pc =300
That leaves you with 1500-(700+300)=500
Tax &50pc =250

https://www.boards.ie/vbulletin/showthread.php?t=2057909222&page=16


The example above shows that the tax take is actually around 33 percent. This can differ from one rental to another.



The only was any landlord can pay 50 percent or higher in tax is if they own the property outright, don't insure it & spend zero on maintenance accountant, advertising, phone, stamps etc.



I have never heard of a landlord paying over 50 percent of the rent in tax & I can't see how it can be possible when expenses are fully tax deductible.



It's a myth. Don't believe this nonsense

EDIT: I think I made a mistake in calculations there. Paying 250 in tax is actually less than 17 percent of the 1500 rent

17 percent is nowhere near the 50 percent some would have you believe.

Franz Von Peppercorn

Old diesel wrote: »

There is a massive difference between income tax of 50 percent and paying zero.

Corporation tax for example is 12.5 percent.

It's a lot less then 50 percent but is justified on basis of creating jobs.

In a rental shortage then it seems prudent to remove barriers to investment OR staying in the sector.

Why would reducing taxes on certain types of amateur landlords (with another job) reduce rental prices? Corporations can already pay just 12.5% so corporate landlords are already in that position.

If you are the government and you are losing landlords everyday and people become homeless as a result and you are going to pay 5 grand a month to a hotel per family then you mIght listen to the guy who could continue suppling you a far more suitable solution at 1500 to 2 k a month when he cites tax as an issue for him leaving the market.

The problem is we are not building enough houses. The problem isn’t that there is a glut of houses to sell and still a problem with homelessness. In that case you might consider taxation policies that encourage landlordism.

If there were more landlords in the present environment houses would be even harder to buy for first time buyers and there would still be a rental crisis.

Ditto supports in upgrading properties to hit some standard YOU the Govt thinks is needed.

Ok, so no regulations at all then.

The Student

Senature wrote: »

If landlords are selling up for any reason, the property is then available to be used for housing, so I don't see how this contributes to homelessness. Properties that have changed use to short term lets and or are being left vacant are definitely increasing homelessness. Personally, I totally understand why landlords would choose short term letting or vacancy under the current circumstances, but I don't think it should be allowed. Properties are originally given planning permission to provide a function, they should be fulfilling it.

Still not understanding why the tax rate is the problem. Have landlords not always paid approximately this level of tax? Why is it suddenly a problem now?

If a property is rented to four people and sold to a couple you have lost two bed spaces to the rental market.

Senature

I think one of the main problems for landlords is that their mortgages are too high. If you try to start a small business with a massive loan you are going to struggle, for years and years, and ultimately find it extremely difficult to succeed. The problem here is not tax, it is the business structure.

As an example, someone working as a self-employed plumber or carpenter, will be treated roughly the same as a landlord for tax purposes.
In that business, they are supposed to do their work to certain set standards and comply with regulations. Also, some people will delay paying them for work they have done, some will try not to pay at all. They are likely to receive plenty of money one week, followed by little or nothing for extended periods, and still have to pay their rent/mortgage/bills/food/childcare etc. Their work van or shed might get broken into with materials and tools robbed. They will find it very difficult to work if they are physically sick or injured etc etc. As a self employed person, social welfare supports are not as easily accessed.

Would anyone advise the person above to get a loan for upwards of 100,000 before starting that business to fund the vehicle, tools, materials, premises etc they might need? Don't think so.

TheChizler

This whole corporation tax vs landlord tax thing annoys me. Do people think the employees of those corporations are happy to leave the low-taxed profits sitting in a bank account? No. They get paid a salary, or income, which is subject to the same income TAX, PRSI, and USC as the rest of us.

I'm sure the executives have some creative accounting practices that lessen their tax bill, but there are way more employees that don't. I'd be interested to see the total of percentage of rental income for one of these companies that ends up as tax, through corporation tax, VAT, and employee tax, and the breakdown of expenses. That would be somewhat meaningful.

A corporation is not equivalent to a sole-trader, it has employees you need to account for when you're talking about cash in pocket. Direct comparisons are meaningless.

Senature

The Student wrote: »

If a property is rented to four people and sold to a couple you have lost two bed spaces to the rental market.

Technically true, WHEN that is the case. The opposite can also be true where a single person was living in a 2 bed rented house/apartment that is then sold to a couple with a child. For example my grandparents spent 20 years living in a house just the two of them, having raised their family. My granny was then there for 10 years by herself. The house was sold after she died, and now houses a family of 5. Unless you have some studies to support this type of claim, I don't think this argument stands up to scrutiny.

Monokne

artanevilla wrote: »

Do you think if taxes were lowed the rents would come down too?

It would just mean the LL gets more of a percentage.

The rent will be what people are willing to pay.

As a landlord, I completely disagree. I am stuck with a property I can't sell and a business I don't want. If VAT was 20%, I'd reduce rent by a few hundred euro no bother.

Sleeper12

The Student wrote: »

If a property is rented to four people and sold to a couple you have lost two bed spaces to the rental market.

It could equally have as much chance of mum, dad & three children buying it & actually increasing its occupancy total

Grumpypants

I've always said the best rent control the government could put in place is a tax free allowance of 10k for a single, one property, landlord. Much like the 14k rent a room scheme. But have it so if you charge 10,001 you pay tax on it all.

Over night rents would drop to 833 a month which is a fair price and a fair rental income.

For me to earn 833 now i'd have to jack up my rent to 1,333. A 500 euro increase would cripple my HAP tenant and add her to the homeless list.

Fol20

Speaking from a ll point of view. I believe the tax should be treated the same as every other form of income.

The items I don’t like however is you can’t expense several items such as lpt, flat rate expenses for petrol and phone bill. All expenses should be treated like a business and mortgage interest should be 100pc deductible. I don’t like the fact the income is non reckonable income either so you cant send some of the funds to a pension. It’s far from a passive income and there is quite a lot of work in this job but they don’t see it that way

Magnatu

The government transfers hundreds of millions to landlords every year through the HAP schemeun order to keep rent levels high. This is significantly more than they receive from tax on rental income.

Fol20

Grumpypants wrote: »

I've always said the best rent control the government could put in place is a tax free allowance of 10k for a single, one property, landlord. Much like the 14k rent a room scheme. But have it so if you charge 10,001 you pay tax on it all.

Over night rents would drop to 833 a month which is a fair price and a fair rental income.

For me to earn 833 now i'd have to jack up my rent to 1,333. A 500 euro increase would cripple my HAP tenant and add her to the homeless list.

What would happen if you had two properties. Does that mean everything would be taxed then if both were at the 833? The fairest way to implement this system is to have a threshold of 5k and anything above that is taxed. I don’t see why we should get that since it is just another form of income but it would be fairer

Little Less Conversation

I'm paying very cheap rent where I am now and after doing the maths my landlord is only getting €500 a month for a four bedroomed house. That's nothing. I hope the government cops on and reduces their tax intake. There are decent landlords out there that aren't going to shaft their tenants either.

TheChizler

Little Less Conversation wrote: »

I'm paying very cheap rent where I am now and after doing the maths my landlord is only getting €500 a month for a four bedroomed house.

Does the landlord not have any other source of income? If yes how do you know how much it is out of interest?

GingerLily

TheChizler wrote: »

Does the landlord not have any other source of income? If yes how do you know how much it is out of interest?

He also gets to own a property at the end of it!

Grumpypants

Fol20 wrote: »

What would happen if you had two properties. Does that mean everything would be taxed then if both were at the 833? The fairest way to implement this system is to have a threshold of 5k and anything above that is taxed. I don’t see why we should get that since it is just another form of income but it would be fairer

The idea is to give a fair return to the landlord AND control rents. Rents now are being jacked up because 60% of it is lost to the tax man. If you simply reduce the tax it won't get passed on.

But if you offer a massive reward to charge a fair rent and a massive punishment to over charge it fixes it.

70% of landlords in Ireland have 1 property. That's a huge chunk of rent control that is fair to both parties and simple to implement.

noodler

Monokne wrote: »

As a landlord, I completely disagree. I am stuck with a property I can't sell and a business I don't want. If VAT was 20%, I'd reduce rent by a few hundred euro no bother.

Don't believe this for a second.

No offence.

Landlords would have zero incentive to reduce the rent in the current Market under that scenario.

Grumpypants

GingerLily wrote: »

He also gets to own a property at the end of it!

And when he sells it he pays a huge tax bill on that again.

Fol20

artanevilla wrote: »

Do you think if taxes were lowed the rents would come down too?

It would just mean the LL gets more of a percentage.

The rent will be what people are willing to pay.

Yea I do think rents may come down in the long term. It won’t come down initially as ll will get a higher percentage of cash flow and income and they will like to maximize this(as a business should). The reason why it will come down as it will make it more attractive to current landlords to stay in the market and attract more ll to it. It’s basic economics and the more supply and options you have, prices will come down. Its not because ll want the price to come down. It’s just a natural affect of more supply and the only way to fix the rental crisis is not my crippling ll more and more but by either making it more lucarative for them thus increasing supply or by physically building btl properties in mass. The latter might be difficult unless government run as more ll are getting out of the market and wouldn’t have an interest in buying them privately.