RPZ query

Aye Bosun

Current tenant has just handed in their notice. I’ve friends who’ve hit hard times and I’d like to assist if I can, I was thinking about letting them rent the place from me for a few years at a reduced rent to let them save and get back on their feet.

So my question is, if the property is currently rented for €1500/m and to help my friend out I’m happy to reduce the rent to €1000/m for the few years they need it, when it comes to renting the property again I am only allowed increase the rent by 4% on the €1000 rent or can I revert back to €1500/m which is market value.

Basically, I don’t want to be penalised in the long the run for doing friends a favour and find the property can only be rented out below market value after the leave!

meijin

much simpler solution: rent to unrelated tenants & give your friends 500e/month cash

PS nobody can predict what will happen in relation to RPZ, but under current legislation you can't "go back to market value"

ted1

meijin wrote: »

much simpler solution: rent to unrelated tenants & give your friends 500e/month cash

PS nobody can predict what will happen in relation to RPZ, but under current legislation you can't "go back to market value"

He’ll pay tax on the 500 before he gives it to a friend , the friend will have to pay tax on their extra 6,000 euro income.

OP. How well do you know these ? In a few years if they are getting cheap rent will they move ? When they go on a foreign holiday or make big purchases will you look on thinking that you just paid for then ?

punisher5112

Op these tend to end in disaster and friendship lost.

Be very careful as there have been quite a few on here stating their friends stopped paying, overstayed, wrecked the place etc etc.

Aye Bosun

punisher5112 wrote: »

Op these tend to end in disaster and friendship lost.

Be very careful as there have been quite a few on here stating their friends stopped paying, overstayed, wrecked the place etc etc.

Thanks for your concern, but that’s not an issue I’m worried about. I appreciate these things can south at any point but for this thread i’d just like to focus on the legality of RPZ and reinstating the higher rent when the house goes back up for rent. Not being rude, just want to focus on the issue at hand!

Samuel T. Cogley

Aye Bosun wrote: »

Thanks for your concern, but that’s not an issue I’m worried about. I appreciate these things can south at any point but for this thread i’d just like to focus on the legality of RPZ and reinstating the higher rent when the house goes back up for rent. Not being rude, just want to focus on the issue at hand!

That's easy then, absent a change in the law, you're goosed.

Fian

Aye Bosun wrote: »

Current tenant has just handed in their notice. I’ve friends who’ve hit hard times and I’d like to assist if I can, I was thinking about letting them rent the place from me for a few years at a reduced rent to let them save and get back on their feet.

So my question is, if the property is currently rented for €1500/m and to help my friend out I’m happy to reduce the rent to €1000/m for the few years they need it, when it comes to renting the property again I am only allowed increase the rent by 4% on the €1000 rent or can I revert back to €1500/m which is market value.

Basically, I don’t want to be penalised in the long the run for doing friends a favour and find the property can only be rented out below market value after the leave!

to answer your specific question : you will be permitted to raise the rent by 4% per annum on the €1,000 and it would be unlawful to revert to the €1500 (or €1,500 plus 4% per annum.)

meijin

just read this thread: https://www.boards.ie/vbulletin/showthread.php?t=2057922203

short answer is "no"

Aye Bosun

Thanks folks, it looks like a no on this front..appreciate all the advise, as usual you guys are an endless source of info!

Browney7

Aye Bosun wrote: »

Thanks folks, it looks like a no on this front..appreciate all the advise, as usual you guys are an endless source of info!

You could set the rent at 1500 and they pay you a 1000 and you never pursue the arrears. It could be an option.

I'd advocate not going down the road of mixing business and friendships though

Kingp35

Browney7 wrote: »

You could set the rent at 1500 and they pay you a 1000 and you never pursue the arrears. It could be an option.

Don't do this. Revenue will assume you received €1500 pm and tax you on this.

Browney7

Kingp35 wrote: »

Don't do this. Revenue will assume you received €1500 pm and tax you on this.

Does that mean a LL who has a long term delinquent tenant that pays no rent still has to pay tax due to revenue?

banie01

A means of protecting the RPZ and reducing tax liabilities on both parties could perhaps be a caretaker agreement?
Others can no doubt confirm or exclude.

ted1

ted1 wrote: »

He’ll pay tax on the 500 before he gives it to a friend , the friend will have to pay tax on their extra 6,000 euro income.

OP. How well do you know these ? In a few years if they are getting cheap rent will they move ? When they go on a foreign holiday or make big purchases will you look on thinking that you just paid for then ?

I’m not saying he should give money to the friend but the 6k would be very much a gift so the op can gift 3k to his friend and 3k his friends wife/partner totally tax free and above board. A few k to help someone out is the very definition of a gift.

Kingp35 wrote: »

Don't do this. Revenue will assume you received €1500 pm and tax you on this.

Only 1k per month would be declared in the tax return along with bank statements proving only 1k per month received. I see no revenue issue at all with this. Why would revenue assume anything.

4ensic15

Kendall Mammoth Hangar wrote: »

I’m not saying he should give money to the friend but the 6k would be very much a gift so the op can gift 3k to his friend and 3k his friends wife/partner totally tax free and above board. A few k to help someone out is the very definition of a gift.



Only 1k per month would be declared in the tax return along with bank statements proving only 1k per month received. I see no revenue issue at all with this. Why would revenue assume anything.

The tenancy and the amount of rent has to be registered with the RTB. The revenue will assume that the registered rent is being charged and received and will not believe bull about "helpin a friend".

4ensic15

4ensic15 wrote: »

The tenancy and the amount of rent has to be registered with the RTB. The revenue will assume that the registered rent is being charged and received and will not believe bull about "helpin a friend".

Sure the amount of rent registered with the RTB often bares no resemblance to the actual rent as it’s often raised well above what was registered. Also the RTB has nothing to do with revenue.

A LLs dealing with revenue is his tax return, where he declares his income and pays his tax, what is registered with the RTB is meaningless it’s nothing whatsoever to do with revenue or his tax return etc.

4ensic15

Kendall Mammoth Hangar wrote: »

Sure the amount of rent registered with the RTB often bares no resemblance to the actual rent as it’s often raised well above what was registered. Also the RTB has nothing to do with revenue.

A LLs dealing with revenue is his tax return, where he declares his income and pays his tax, what is registered with the RTB is meaningless it’s nothing whatsoever to do with revenue or his tax return etc.

The Revenue have the right to get details of any rental from the RTB. They can and frequently obtain such info. The will assume the rent registered is the minimum and it would take some convincing to claim that a rent below the registered rent and market value was being charged.

Ray Palmer

4ensic15 wrote: »

The Revenue have the right to get details of any rental from the RTB. They can and frequently obtain such info. The will assume the rent registered is the minimum and it would take some convincing to claim that a rent below the registered rent and market value was being charged.

Revenue act on tax returns and records. You file and provide details through an accountant. Even if revenue look up the rent registered it makes absolutely no difference you provided records of income. There is no convincing as you provide proof. Have you ever filed a tax return because it doesn't sound like you have?

Garibaldi?

The Revenue and RTB do not automatically engage with each other. If there were an issue or a query they would. Revenue and RTB should be given the same information. Otherwise the property owner might have awkward questions to answer.

Ray Palmer

Garibaldi? wrote: »

The Revenue and RTB do not automatically engage with each other. If there were an issue or a query they would. Revenue and RTB should be given the same information. Otherwise the property owner might have awkward questions to answer.

It is incredibly common for a landlord not to get all rent due. Revenue do not find this unusual. Unless anything is flagged intentionally they won't look into anything. People have a strange view of civil servants where they are both lazy and also incredibly diligent. Lots of automation for processing records where they are rarely viewed by a human in any detail is the reality

Kingp35

Ray Palmer wrote: »

It is incredibly common for a landlord not to get all rent due. Revenue do not find this unusual. Unless anything is flagged intentionally they won't look into anything. People have a strange view of civil servants where they are both lazy and also incredibly diligent. Lots of automation for processing records where they are rarely viewed by a human in any detail is the reality

You're correct, it is automatic. If you register a tenancy with the RTB for €1500pm and you file a tax return that includes rental income of €1000pm then Revenue's system will flag this and you may be subject to a tax compliance intervention. If you can't sufficiently prove you only received €1000pm then you will be taxed on the €1500 plus interest and possible penalties.

Garibaldi?

I'd say the Revenue are well used to hearing all kinds of stories. I wouldn't get creative about the rent but would gift the people some money f they need it and you have it. Anything up to €3000 p.a. to ANY PERSON does not attract a tax liability on either side.

Garibaldi?

banie01 wrote: »

A means of protecting the RPZ and reducing tax liabilities on both parties could perhaps be a caretaker agreement?
Others can no doubt confirm or exclude.

A caretaker's agreement means that they give you no rent at all I remember someone telling me that they did this , but it was for a daughter in college in Dublin.She had no income. The parents were still supporting her

Samuel T. Cogley

Garibaldi? wrote: »

I'd say the Revenue are well used to hearing all kinds of stories. I wouldn't get creative about the rent but would gift the people some money f they need it and you have it. Anything up to €3000 p.a. to ANY PERSON does not attract a tax liability on either side.

It would attract tax if first being paid to the LL in rent.

Ray Palmer

Kingp35 wrote: »

You're correct, it is automatic. If you register a tenancy with the RTB for €1500pm and you file a tax return that includes rental income of €1000pm then Revenue's system will flag this and you may be subject to a tax compliance intervention. If you can't sufficiently prove you only received €1000pm then you will be taxed on the €1500 plus interest and possible penalties.

I can assure you they do not have such a system. Have you actually filed a tax return because that is not what happens?

sunnysoutheast

Ray Palmer wrote: »

It is incredibly common for a landlord not to get all rent due. Revenue do not find this unusual. Unless anything is flagged intentionally they won't look into anything. People have a strange view of civil servants where they are both lazy and also incredibly diligent. Lots of automation for processing records where they are rarely viewed by a human in any detail is the reality

True, but does any rent not collected need to be proved as unrecoverable for taxable rental profits to be amended?

Signing a tenancy agreement for 15k per year and then trying to tell Revenue that you received "only 10k" of it on your tax return would be of interest if audited, to say the least.

Garibaldi?

It can happen that a good tenant just can't afford to pay the amount laid down in the agreement. A decent landlord often turns a blind eye to the shortfall. You'd need to be able to provide evidence, just in case-bank statements, receipts, whatever. A difference of €5000 would raise alarm bells!

4ensic15

Ray Palmer wrote: »

Revenue act on tax returns and records. You file and provide details through an accountant. Even if revenue look up the rent registered it makes absolutely no difference you provided records of income. There is no convincing as you provide proof. Have you ever filed a tax return because it doesn't sound like you have?

Have you ever had a Revenue audit because it doesn't sound like you have? Returns are not proof. They are what you say you owe. They are subject to checking. The revenue select cases for audit. Ownership of assets like investment property is a criterion for selection. If your case is selected then the revenue will obtain information from all kinds of sources, then pay you a visit and look at your books. Any discrepancy between what you told them and what they know from other sources has to be explained.

Garibaldi?

Sometimes genuine, reliable tenants fall into a situation where they simply cannot pay the rent. They come to an arrangement with the landlord. It would be very uncaring of any landlord not to help a tenant in a situation like this. It's also in the landlord's own interests. Who would want to have to go through advertising, PRTB registration, changing of utility bills etc etc if that person were gone? But legitimate documentation is essential in case the Revenue make enquires.

1874

Garibaldi? wrote: »

Sometimes genuine, reliable tenants fall into a situation where they simply cannot pay the rent. They come to an arrangement with the landlord. It would be very uncaring of any landlord not to help a tenant in a situation like this. It's also in the landlord's own interests. Who would want to have to go through advertising, PRTB registration, changing of utility bills etc etc if that person were gone? But legitimate documentation is essential in case the Revenue make enquires.

Someone who wants/needs the rent to be paid

Garibaldi?

1874 wrote: »

Someone who wants/needs the rent to be paid

You are absolutely right there. However a lot of these discussions tend to polarise people into "landlords" and "tenants" as if they were bound to be at loggerheads. A bit of give and take has solved many world sized problems.