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

Franz Von Peppercorn

Wanderer78 wrote: »

i beg to differ, continual growth is wreaking havoc on this planet, particularly environmentally. David Graeber is making a stir regarding 'bull**** jobs'!

The planet problem is solvable with technology. The problem there is politics.

Franz Von Peppercorn

LotharIngum wrote: »

As I have clarified in the first post, we are talking about rent increases being taxed at 50% and we are also talking about cost neutral reductions to the landlord but with significant reductions to the tenant. There have even been some ,much better ideas than mine getting lost in the landlord bashing in the thread which all suggest that it would be very easy to lower rents significantly with no cost to the owners.

People are just getting too caught up in the bash the landlord game instead of looking at ways to reduce peoples rents.

And that's exactly where Leo wants them. At each others throats and overlooking the good that Leo has the potential to do with the stroke of a pen, but wont.

That’s a strange response my factual claim that rent isn’t really taxed at 50%. The only somewhat valid suggestion here was to cap tax free rent at say 14000 a year, and then tax it all if a penny more was spent. That in theory could reduce rents but in reality we’d probably just get a lot of contracts saying 14000 and then other cash payments thrown in.

That wouldn’t solve the crisis anyway. The crisis is that there’s not enough housing not not enough landlords.

Franz Von Peppercorn

Assetbacked wrote: »

The largest landlord in Ireland pays no tax on rental income. This is true of all REITs. Absolutely scandalous and implemented by the government of Noonan and Howlin at the time in 2012/2013.

Do they give renters cheaper rent?

Assetbacked

Franz Von Peppercorn wrote: »

Do they give renters cheaper rent?

You can go on Daft and see a rake of short-term lettings with agencies and management companies tied to REITs. These REITs also increase demand (and therefore rents) by not letting their entire rentable portfolios.

wowy

Assetbacked wrote: »

The largest landlord in Ireland pays no tax on rental income. This is true of all REITs. Absolutely scandalous and implemented by the government of Noonan and Howlin at the time in 2012/2013.

The shareholders in REITs pay tax on the dividends received.

You'll immediately reply that pension funds own huge portions of the REITS and they don't pay taxes - when the pensioner draws down their pension they'll be taxed on that annuity income.

So yes, REITs themselves don't pay IT on rental income, but the rental income is taxed down the line on shareholders or pensioners.

davindub

Assetbacked wrote: »

The largest landlord in Ireland pays no tax on rental income. This is true of all REITs. Absolutely scandalous and implemented by the government of Noonan and Howlin at the time in 2012/2013.

EDIT: Will include an IT article on Budget 2017 https://www.irishtimes.com/business/personal-finance/budget-2017-will-there-be-any-help-for-landlords-1.2820981

Reits avoid the 25% corp tax on case 5 income.

They do of course distribute their earnings to their shareholders each year (obliged to do this) who pay tax at the same rates as landlords (income tax).

Exception being pension funds who distribute the funds to their members who pay the same tax as landlords.

All above board.

Assetbacked

wowy wrote: »

The shareholders in REITs pay tax on the dividends received.

You'll immediately reply that pension funds own huge portions of the REITS and they don't pay taxes - when the pensioner draws down their pension they'll be taxed on that annuity income.

So yes, REITs themselves don't pay IT on rental income, but the rental income is taxed down the line on shareholders or pensioners.

The IT article above notes that 90% of the shareholders in Irish REITs are in the UK. I would be surprised if the other 10% was made of Irish shareholders. This means that even if tax is paid down the line it is not paid in Ireland. Therefore, REITs and everything connected to them profit at the direct expense of individual tax-payers in Ireland. People should be rioting on the streets at the inequality in the tax system in Ireland.

relax carry on

Assetbacked wrote: »

The IT article above notes that 90% of the shareholders in Irish REITs are in the UK. I would be surprised if the other 10% was made of Irish shareholders. This means that even if tax is paid down the line it is not paid in Ireland. Therefore, REITs and everything connected to them profit at the direct expense of individual tax-payers in Ireland. People should be rioting on the streets at the inequality in the tax system in Ireland.

Taxation
2.1. Taxation of a REIT [section 705G TCA]
A company which is either a REIT or a member of a group REIT is not chargeable to
corporation tax (CT) on income from its property rental business. Equally, it is not
chargeable to capital gains tax (CGT) accruing on the disposal of assets of its property rental
business.
However, if a REIT or group REIT acquires an asset and following that acquisition, develops
that asset to the extent that the cost of development exceeds 30% of the market value of
the asset at the time the development commenced and the asset is then disposed of within
3 years of completion of the development, then, the CT and CGT exemptions applicable to
the REIT or group REIT, as the case may be, no longer apply.
A REIT or group REIT will be charged to corporation tax under Case IV of Schedule D if it
makes a distribution of less than 85% of its annual property income.
In addition, s.70G(3) (introduced by s. 29 Finance Act 2014), extended the exemption from
DIRT applicable to other similar investment vehicles to a REIT or group REIT\0.


2.2. Taxation of shareholders in a REIT [section 705J TCA]
The general Dividend Withholding Tax (DWT) provisions apply to distributions from a REIT.
Therefore, an Irish resident individual will suffer DWT on distributions. An Irish resident
“excluded person”, such as a pension scheme or charity investing in the REIT, may receive
distributions gross, subject to completion of the appropriate Schedule 2A declaration.
Distributions from a company in a group REIT to another company in the same group REIT
are exempt from corporation tax.
Non-resident investors are subject to DWT on distributions from a REIT as section 41, as the
provisions of subsections (2) and (3) of section 172D were disapplied. However, non-resident
investors who are resident in countries with which Ireland has a double taxation agreement
(DTA) or treaty may be able to reclaim some of the DWT, if the relevant tax treaty permits.
\0

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-25a/25a-00-01.pdf

Franz Von Peppercorn

Assetbacked wrote: »

The IT article above notes that 90% of the shareholders in Irish REITs are in the UK. I would be surprised if the other 10% was made of Irish shareholders. This means that even if tax is paid down the line it is not paid in Ireland. Therefore, REITs and everything connected to them profit at the direct expense of individual tax-payers in Ireland. People should be rioting on the streets at the inequality in the tax system in Ireland.

It’s not unequal. Some shareholders happen to be abroad is all.

Assetbacked

Franz Von Peppercorn wrote: »

It’s not unequal. Some shareholders happen to be abroad is all.

The inequality stems from the people paying tax while REITs themselves do not. A REIT is a means of hovering up wealth in the economy and taking it away from the reaches of the exchequer. In a crisis as we are in with housing, which is at catastrophic levels, people need some relief such as a meaningful income tax reduction. But wait, this only increases inflation so therefore won’t happen. Meanwhile REIT rental income, which should be low hanging fruit for taxation, continues to be looted from under the exchequer’s nose and with a nod from the government.

Assetbacked

relax carry on wrote: »

Taxation
2.1. Taxation of a REIT [section 705G TCA]
A company which is either a REIT or a member of a group REIT is not chargeable to
corporation tax (CT) on income from its property rental business. Equally, it is not
chargeable to capital gains tax (CGT) accruing on the disposal of assets of its property rental
business.
However, if a REIT or group REIT acquires an asset and following that acquisition, develops
that asset to the extent that the cost of development exceeds 30% of the market value of
the asset at the time the development commenced and the asset is then disposed of within
3 years of completion of the development, then, the CT and CGT exemptions applicable to
the REIT or group REIT, as the case may be, no longer apply.
A REIT or group REIT will be charged to corporation tax under Case IV of Schedule D if it
makes a distribution of less than 85% of its annual property income.
In addition, s.70G(3) (introduced by s. 29 Finance Act 2014), extended the exemption from
DIRT applicable to other similar investment vehicles to a REIT or group REIT\0.


2.2. Taxation of shareholders in a REIT [section 705J TCA]
The general Dividend Withholding Tax (DWT) provisions apply to distributions from a REIT.
Therefore, an Irish resident individual will suffer DWT on distributions. An Irish resident
“excluded person”, such as a pension scheme or charity investing in the REIT, may receive
distributions gross, subject to completion of the appropriate Schedule 2A declaration.
Distributions from a company in a group REIT to another company in the same group REIT
are exempt from corporation tax.
Non-resident investors are subject to DWT on distributions from a REIT as section 41, as the
provisions of subsections (2) and (3) of section 172D were disapplied. However, non-resident
investors who are resident in countries with which Ireland has a double taxation agreement
(DTA) or treaty may be able to reclaim some of the DWT, if the relevant tax treaty permits.
\0

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-25a/25a-00-01.pdf

Thank you for providing the technical background to my point. I would highlight the last part of this which references double taxation treaties. This applies to mean that UK shareholders receiving distributions from the Irish REIT do not pay tax in Ireland but are subject to their regime in the UK. Therefore, no tax paid on the whole process in Ireland. It’s messed up.