Tax on Rental Income

Abbey127

Hi does anyone know how much tax you would have to pay to have a lodge cabin built in the back of my garden to rent out ? Thanks in advance

averagejoe123

Abbey127 wrote: »

Hi does anyone know how much tax you would have to pay to have a lodge cabin built in the back of my garden to rent out ? Thanks in advance

You will need to provide a lot more information to get a meaningful answer.

Presuming the cabin is independent to your PPR you will be liable for tax on the whole rent minus the allowable expenses. The tax rate will be 20% or 40% depending on your other sources of income.

Abbey127

averagejoe123 wrote: »

You will need to provide a lot more information to get a meaningful answer.

Presuming the cabin is independent to your PPR you will be liable for tax on the whole rent minus the allowable expenses. The tax rate will be 20% or 40% depending on your other sources of income.

It will be a two bed lodge cabin 52sq m it will be built on in my parents back garden

Graham

Mod Note

As this is not related to mortgages I've split into a new thread.

Stheno

Abbey127 wrote: »

It will be a two bed lodge cabin 52sq m it will be built on in my parents back garden

Do you have planning permission for that?

ceekay74

Who owns it?

Abbey127

Stheno wrote: »

Do you have planning permission for that?

Yes I do

Abbey127

ceekay74 wrote: »

Who owns it?

Hi I will

20/20

I didn't know you need planning permission for the cabins . Do you ?
What sort of money does the cabin cost fully erected onsite ?

averagejoe123

Abbey127 wrote: »

Yes I do

But its going to be in your parents back garden?

You need to give more information here as there isn't a generic answer to your question.

Who owns the land where the cabin is to be built?
Who is going to rent it? Family member or general public?

Stheno

20/20 wrote: »

I didn't know you need planning permission for the cabins . Do you ?
What sort of money does the cabin cost fully erected onsite ?

Think you do to have them as habitable spaces for people to live in. Or I may be confusing p.o. with building regulations requirements

Abbey127

averagejoe123 wrote: »

But its going to be in your parents back garden?

You need to give more information here as there isn't a generic answer to your question.

Who owns the land where the cabin is to be built?
Who is going to rent it? Family member or general public?

Hi yes this is why I'm asking does anyone know more about this or have they done . The cabin will be on my parents land I don't need planning permission if the log cabin is 25sq m . It will be rented out to general public

Abbey127

20/20 wrote: »

I didn't know you need planning permission for the cabins . Do you ?
What sort of money does the cabin cost fully erected onsite ?

The cost is different for everyone depending whst they are after . You don't need planning permission if the cabin is 25sq m I'm not sure I will need it if the cabin will be on my parents land . I was hoping someone eles would know more about it or has done something similar

averagejoe123

Abbey127 wrote: »

Hi yes this is why I'm asking does anyone know more about this or have they done . The cabin will be on my parents land I don't need planning permission if the log cabin is 25sq m . It will be rented out to general public

Have your parents gifted you this land? Who is going to be the owner of the cabin? Who is paying for it to be put up?

ceekay74

If you are the one receiving the rent, it sounds reasonable that you will be the one declaring the income.

What rate of tax are you currently on?

Fian

Assuming you can build and rent out this structure:

you will pay income tax and USC on the rental income (less allowable expenses) the same as any other income. So depending on the extent of your other sources of income you will pay at the standard or higher rate.

You will need to make a tax declaration using form 11 in November of each year (electronically) or in October if you do it on paper.

ldy4mxonucwsq6

Abbey127 wrote: »

The cost is different for everyone depending whst they are after . You don't need planning permission if the cabin is 25sq m I'm not sure I will need it if the cabin will be on my parents land . I was hoping someone eles would know more about it or has done something similar

You do need planning permission if someone will be living in the cabin.

Duffryman

Abbey127 wrote: »

You don't need planning permission if the cabin is 25sq m I'm not sure I will need it if the cabin will be on my parents land

So was it just a typo up above, where you said 52 sq. m.?

Either way, rental income from it would be assessed for tax purposes in the same way as any other rental property. Take the figure of rent money received, deduct the total of allowable expenses, and pay 20% or 40% on the rest, depending on the level of your other income. You'll pay USC as well, in the usual way. Not sure about PRSI.

If you haven't done so already, have a look at https://www.revenue.ie/en/property/rental-income/irish-rental-income/index.aspx

By the way, all those other questions other people are putting to you are valid, even if they're not directly relevant to your own initial question.

One of the main ones being who actually owns the plot of ground this cabin will be built on? Have your parents gifted it to you, or are they about to?

Not sure myself if you're even allowed to build on land owned by somebody else. And if even you did, there could be all sorts of legal repercussions in the future.

Abbey127

averagejoe123 wrote: »

Have your parents gifted you this land? Who is going to be the owner of the cabin? Who is paying for it to be put up?

Yes they have. I will be the owner of the cabin and will be paying for it

Stheno

Abbey127 wrote: »

Yes they have. I will be the owner of the cabin and will be paying for it

Do a search on here on log cabins and save yourself wasting money

3DataModem

Duffryman wrote: »

Not sure myself if you're even allowed to build on land owned by somebody else.

The general rule (open to be corrected) is if a permanent building is built on land, it becomes the property of the owner of the land. We use things like leasehold etc to create weird exceptions to this around airspace, common areas, etc... but essentially as described; this building will belong to OPs parents.

However if OP is receiving and benefiting from the income with the permission of the owners (again, seems to be what he describes), then he declares the income to revenue.

Claw Hammer

Abbey127 wrote: »

Hi yes this is why I'm asking does anyone know more about this or have they done . The cabin will be on my parents land I don't need planning permission if the log cabin is 25sq m . It will be rented out to general public

There is no need for planning permission for an extension to a house if the extension does not bring the original size of the house up by more than 40sqm, or 60sqm if two storey. This exemption does not apply in the case of a separate structure intended as a separate dwelling. There is also an exemption for a third class building such as a shed if it is under a certain size including height provided it is not for human habitation.
A log cabin intended to be rented as a dwelling, or lived in at all, requires planning permission. The chances of getting such a permission are very low.

awec

Abbey127 wrote: »

Yes I do

No you don't.

Gumbo

Abbey127 wrote: »

Yes I do

No to don’t. I guarantee you don’t have planning permission for a log cabin that can be rented out as a habitable space in your parents back garden.

20/20 wrote: »

I didn't know you need planning permission for the cabins . Do you ?
What sort of money does the cabin cost fully erected onsite ?

You need planning to make it habitable. Planning will be refused in this scenario.

Abbey127 wrote: »

Yes they have. I will be the owner of the cabin and will be paying for it

You will be the owner of a garden shed.

awec wrote: »

No you don't.

100% agree

OP, do some proper research into this before handing over any money to log cabin companies. I note from your other threads you are applying for Garda and prison service jobs, bear in mind the prosecution for breach of planning and building regulations through the enforcement process are criminal convictions so it may have an impact on your career choice.

ted1

Abbey127 wrote: »

Hi yes this is why I'm asking does anyone know more about this or have they done . The cabin will be on my parents land I don't need planning permission if the log cabin is 25sq m . It will be rented out to general public

Pretty sure that’s a sheds and not a habitable residence also is 25m not below the new limit Fira 1bed

_Brian

Problem with log cabins is by the time you add enough upgrades to make them compliant to building standards they are no cheaper than most regular building methods.
Plus much more external maintenance

bri007

It takes one person to report it to the council that you have people living in the log cabin and all your money is then gone, as you will be forced to pull the cabin down.

I heard of some of these log cabin companies telling customers that they can rent these out but they are not telling the full true story.

It’s a costly thing to do and one that won’t work out, other than using it as a gym or playroom etc and not as a habitable place.

Samuel T. Cogley

Around 54% less deductible expenses which I'm presuming you won't have that many of.

TheChizler

Samuel T. Cogley wrote: »

Around 54% less deductible expenses which I'm presuming you won't have that many of.

Worst case scenario though. Nobody can say for sure without knowing the income and credits of the landlord.

ted1

Samuel T. Cogley wrote: »

Around 54% less deductible expenses which I'm presuming you won't have that many of.

Ground rent to the parents!!!

Abbey127

Thanks for the advise. I will be going ahead with getting one . I have already told my neighbours I will be building a log cabin they have no problem with it also it's not inn the way of anyones view . So I don't think they can tell me what I can and can not build on my own property. There are a good few log cabins around my area that are being rented out on the north side of Dublin I also have a neighbour who has a log cabin out there garden but are not renting it out . I am also in a better position and have more space so they would have there own enterence to the cabin . I just have to ring the council and see if I can allow them to use a parking space behide my house as I know it's doesn't belong to a house.

Abbey127

bri007 wrote: »

It takes one person to report it to the council that you have people living in the log cabin and all your money is then gone, as you will be forced to pull the cabin down.

I heard of some of these log cabin companies telling customers that they can rent these out but they are not telling the full true story.

It’s a costly thing to do and one that won’t work out, other than using it as a gym or playroom etc and not as a habitable place.

I have already told my neighbours I will be building a log cabin they have no problem with it also it's not in the way of anyones view . I'm pretty sure they can't do anytime once it's has planing permission and is within propper size of the law. If log cabin companies did not tell the whole truth then that would be illegal and would have a lot of court dates lol .

Graham

Abbey127, your posts are quite confusing as you keep posting about having planning permission while at the same time stating planning permission is not required.

If you have applied for, and been granted planning permission (by the local authority) for your log cab then you won't have a problem.

If you have not applied for planning permission and are relying on the provisions for exempted development then you cannot use the structure as a dwelling. Exempted development does not apply if someone is going to live in the cabin.

DCC have issued enforcement notices for the removal of cabins where they are being used as dwellings without the necessary planning permission.

Mod Note

If you are planning to ignore the planning laws and go ahead regardless, that is not something you can discuss here.

doolox

Out in a rural area with few neighbours and if you stick to short term rents with single people, then you should have no problems.

If someone complains and you are in a job in a sensitive public area then there could be problems.

I was in a similar position in the west 20 years ago having to get retention on a chalet behind my parents home.

It went through eventually after much submissions by a specialised engineer doubly qualified as a lawyer but the cost was high. The cost of not getting PP would have been much higher, entailing knocking down and removing the structure.

20 years on and the current owner of the house, from what I have seen on Google maps,( I know....I'm a curious old geezer) has added an extra chalet and extended the existing by another room. This is due to a change in septic tanks to mainline sewage and an urbanisation of the locality in the intervening 20 years allowing more building in smaller plots than heretofore.

Planning processes have become much stricter and people have become much more vocal in their opposition to new developments. You appear to be fortunate in having aligned your plans with your neighbours lifestyles and living arrangements and have not stepped on any toes in your locality. This is vital in order to progress further with your plan.

If you intend to do any major electrical work, which this involves, then you will need a RECI registered contractor to sign off and approve any such work. An accident or fire in the future could land you in deep trouble.
Any habitable space will be subject to inspection by a fire officer and the arrangement of the chalet. door and window openings escape routes etc will need to be planned out to their satisfaction.
Connection to services will need to be inspected and signed off to an approved standard unless you are willing or able to tee into your existing houses services. If the capacity of the waste system is not big enough to handle more waste this can lead to problems, similarly ESB supply capacity may need to be upgraded in order to accommodate extra cookers, heaters or showers.All of these approvals by officials exposes you to detection and refusal or enforcement by the local authorities.

I have heard of people using the rent a room scheme by renting out a room in their house. Their chalet down the back is cited as being for storage , if anybody asks. The reality is that the licencee is allowed to live and use the chalet and is only given cursory use of the room in the main house. Both parties to this agreement get to enjoy the benefits of a separate rental arrangement with totally separate living, sleeping, cooking etc arrangements but the owner gets the benefit of €14k pa tax free.......

This needs very careful vetting and choosing of the licencee as an informant to the relevant authorities could blow the whole thing out of the water.

I have been told that a lodger having a separate front entrance and access to the public street renders the rent a room scheme invalid and the owner becomes liable for full rate of tax, PRSI, USC etc. Both the house owner and the licencee must share the living spaces except the bedroom, hence rent a room.
Also the kicker is that any amounts received over €14k per year renders the whole lot liable to tax. So if you get €14,001 the whole lot becomes liable to tax at your marginal rate.

If you are self employed you are obliged to engage an accountant to return tax statements by Oct 31st each year. PAYE workers can do this themselves but it can be complex. Receipts for any expenses must be kept for 6 years.

Phillip k

Hi has anyone built a granny flat at the end of there garden or side entrance if have one . Trying to decide between a granny flat or a log cabin I know alot of people are goimg with log cabins nowadays. If anyone knows the pros and cons would appreciate any advice thanks.

Samuel T. Cogley

Phillip k wrote: »

Hi has anyone built a granny flat at the end of there garden or side entrance if have one . Trying to decide between a granny flat or a log cabin I know alot of people are goimg with log cabins nowadays. If anyone knows the pros and cons would appreciate any advice thanks.

Pros:

Nice shed

Cons:

Planning.

Phillip k

Samuel T. Cogley wrote: »

Pros:

Nice shed

Cons:

Planning.

Planning is no problem for me

Claw Hammer

Phillip k wrote: »

Planning is no problem for me

Why not?

Edgware

Samuel T. Cogley wrote: »

Pros:

Nice shed

Cons:

Planning.

Pros: Nice shed

Cons: Granny

The_Conductor

Phillip k wrote: »

Planning is no problem for me

How so?

Gumbo

Phillip k wrote: »

Hi has anyone built a granny flat at the end of there garden or side entrance if have one . Trying to decide between a granny flat or a log cabin I know alot of people are goimg with log cabins nowadays. If anyone knows the pros and cons would appreciate any advice thanks.

Pros. Can be a nice space.
Cons. You won’t get planning.

I didn’t think the op was serious when I started reading this thread.

Op, apart from the obvious questions like why would you invest so much in a highly visible business venture without first checking the fundamental regulations which would apply and why you think the planning laws which apply to everyone else, shouldn’t apply to you. There are also other questions you have to ask yourself.

• what implications is this going to have on your parents. How do they feel about randomers going to the back of THEIR house all hours of the day and night.
• if the council get an order against the structure, as the land owners, it will most likely be against them.
• you said the neighbours won’t complain, wait until the loud music/parties start.
• what happens when an argument arises with a tenant, will you be happy for them to be at the back of your parents house.
• you need planning for Airbnb/short lets, if you have tenancy lets, how are you going to register with the RTB/bring a case if you are not the owner?
• what are the implications if your parents/their beneficiaries want to sell? A solicitor will tell you that without planning, their is a major issue.

Sounds to me like you think you can make a handy few quid without actually thinking it through. You need to talk to planning, talk to a solicitor so that you don’t expose your parents and remember to talk to tradesmen, even cabins need services.

4ensic15

Phillip k wrote: »

Planning is no problem for me

https://www.rte.ie/news/dublin/2019/0304/1034113-log-cabins/

Phillip k

Hi planning permission is no problem for me as it was just approved. I knew it wouldn't be as I have been planing this for a good while now and not just decided to build a cabin to be rented out . Also my neighbour who is at the other end of my cul de sac got one built . I'm am at a good location as have easy access to a public road . They will have there own enterence and parking spot to the cabin away from the front of my home . There will be no load music as I will be very careful of who I pick to rent it out to . I also have a family member who is a property manager and can help me if i have any problems.

Phillip k

kceire wrote: »

Pros. Can be a nice space.
Cons. You won’t get planning.

Thanks for the replay I have already got approved for planning permission

Phillip k

I just have to make sure that who ever I rent it out to is able to use a parking space that is available behide my house if they need it as I think it would great to have.

Graham

Phillip k wrote: »

Trying to decide between a granny flat or a log cabin

Did you get planning for the granny flat or the log cabin?

Phillip k

Phillip k wrote: »

Hi planning permission is no problem for me as it was just approved. .

So you did apply for, and was granted planning by DCC? You are giving conflicting reports about this.

Phillip k

Graham wrote: »

Did you get planning for the granny flat or the log cabin?

Log cabin

Gumbo

Phillip k wrote: »

Thanks for the replay I have already got approved for planning permission

Can you link to the public grant of planning as I think you are the first person in Ireland to get planning permission for this.

I also think you may be spoofing as only 2 days ago you posted stating you couldn't decide between a granny flat or a log cabin, now you say you have planning, but you would of having to clearly pick one for the lodgement of the planning application in the first place................

Phillip k wrote: »

Hi has anyone built a granny flat at the end of there garden or side entrance if have one . Trying to decide between a granny flat or a log cabin I know alot of people are goimg with log cabins nowadays. If anyone knows the pros and cons would appreciate any advice thanks.

https://www.irishexaminer.com/breakingnews/ireland/dublin-city-council-defeat-motion-to-permit-building-of-log-cabins-in-gardens-908759.html


https://www.irishtimes.com/news/environment/proposal-for-garden-log-cabins-rejected-due-to-safety-fears-1.3814314?mode=amp

Op, DCC voted against allowing log cabins to be built in gardens last night.