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Tenants not paying rent

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    #62
    TheChizler
    Registered Users Posts: 9,420 ✭✭✭TheChizler


    Niner leprauchan wrote: »
    It's breaking even

    Going way off the OP's topic here, so month to month breaking even on cash flow, but when you consider you're reducing debt with each payment you're doing a hell of a lot better than just "breaking even", you can't ignore that part.

    If I pay into a pension each month I have a negative cash flow but I don't consider that losing money. Barring some (entirely possible) disaster I'll get that money back plus more when I retire.


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    #63
    bbehan202
    Closed Accounts Posts: 66 ✭✭bbehan202


    Thanks everyone for all the feedback. I think I have rested on:

    1. Month 1 - I will accept the lower payment and consider the remainder arrears. I will take money from the deposit to cover the money I am at a loss. I am not considering this a rent reduction.
    2. I will let them know the arrears needs to be paid back to top back up the deposit before the end of the tenancy / when we come out of COVID-19 situation. I will be specific about the criteria here.
    3. Month 2 - If the situation continues I need to see bank statements etc to show evidence of depletion of no savings / depletion of income. At this stage I will re-consider re-using more of the deposit to pay back.

    I will document all of my interactions / keep everything in writing.

    This is the fairest I feel I can be while being empathetic towards their situation but protecting my own financial one.


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    #64
    TheChizler
    Registered Users Posts: 9,420 ✭✭✭TheChizler


    bbehan202 wrote: »
    Thanks everyone for all the feedback. I think I have rested on:

    1. Month 1 - I will accept the lower payment and consider the remainder arrears. I will take money from the deposit to cover the money I am at a loss. I am not considering this a rent reduction.
    2. I will let them know the arrears needs to be paid back to top back up the deposit before the end of the tenancy / when we come out of COVID-19 situation. I will be specific about the criteria here.
    3. Month 2 - If the situation continues I need to see bank statements etc to show evidence of depletion of no savings / depletion of income. At this stage I will re-consider re-using more of the deposit to pay back.

    I will document all of my interactions / keep everything in writing.

    This is the fairest I feel I can be while being empathetic towards their situation but protecting my own financial one.

    Good plan I think except for using the deposit (or at least telling them you're taking it out of the deposit). In their minds you'll be paid at that stage and I wouldn't bet on ever seeing the arrears, and you could be stuck without a deposit at the end.

    Asking for money to top up the deposit could be seen as increasing the deposit midway through a tenancy which I don't think is allowed. Best keep it simple and do things by the book, deal with arrears during a tenancy and deposit at the end.


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    #65
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Browney7 wrote: »
    If it was an interest only mortgage or a house purchased for cash outright would it be more profitable in your definition of what constitutes profit?

    no mortgage means no interest which means by mine and revenues definition, more profit.

    Profit and loss balancing is balanced out or breaking even. Yes, his ASSETS have increased by the value - Outstanding mortgage. Not arguing that but he can't realise that without selling.


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    #66
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    TheChizler wrote: »
    Going way off the OP's topic here, so month to month breaking even on cash flow, but when you consider you're reducing debt with each payment you're doing a hell of a lot better than just "breaking even", you can't ignore that part.

    If I pay into a pension each month I have a negative cash flow but I don't consider that losing money. Barring some (entirely possible) disaster I'll get that money back plus more when I retire.

    No, not ignoring it. I said it in the original comment. Asset portfolio has increased but that's no good when the only way to realise that is by selling an asset that may or may not increase in value.

    My house is now valued more than my mortgage thankfully but considering I still need to buy somewhere to live and they also cost more now, the profits not benefiting me.


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    #67
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    TheChizler wrote: »
    Going way off the OP's topic here, so month to month breaking even on cash flow, but when you consider you're reducing debt with each payment you're doing a hell of a lot better than just "breaking even", you can't ignore that part.

    If I pay into a pension each month I have a negative cash flow but I don't consider that losing money. Barring some (entirely possible) disaster I'll get that money back plus more when I retire.

    Why the assumption that these properties are comparable to pensions or that they ever plan on selling them? For many they are a side line business designed to bring in extra income and the intention to never sell but rather add to a portfolio.


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    #68
    Eric Cartman
    Registered Users Posts: 26,283 ✭✭✭✭Eric Cartman


    allow a temporary reduction for 3 months but be very clear that there are arrears, spread the arrears over 12 months when they're back to work.

    A lot of tenants chancing their arm at the moment thinking they're in for a big reduction in the future or the economy will crash and landlords will be desperate for tenants. If the property is under an hours commute from a city I'd hold your ground. Loads of great tenants out there.


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    #69
    robinbird
    Registered Users Posts: 471 ✭✭robinbird


    Eric Cartman wrote: »

    A lot of tenants chancing their arm at the moment thinking they're in for a big reduction in the future or the economy will crash and landlords will be desperate for tenants. If the property is under an hours commute from a city I'd hold your ground. Loads of great tenants out there.

    There will be a big fall in rent levels unless FG has the additional funds available to significantly increase the subsidy to landlords which is currently one billion a year. e.g. as soon as the Dublin airbnb properties came on the rental market in March Eoghan Murphy acted decisively to pay landlords to take 350 off the market again before they negatively affected supply.

    Danger is they may not have the funds to keep rent levels high if there is a recession.


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    #70
    Marcusm
    Registered Users Posts: 10,213 ✭✭✭✭Marcusm


    Lexie Black Oaf wrote: »
    I’m not arguing with how revenue tax income from a let property, yes it’s unfair as the full mortgage payment should be deductible along with many other deductions standard for or other businesses but not allows for rental businesses but I know how it works.

    I thought the conversation was about what constitutes profit.

    No business gets a deduction for the repayment element if a loan and no sane person would see it as reducing profit. Landlords are not disadvantaged by this.


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    #71
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Marcusm wrote: »
    No business gets a deduction for the repayment element if a loan and no sane person would see it as reducing profit. Landlords are not disadvantaged by this.

    There are capital allowances available for buildings for many businesses, this would be essentially tax relief on the capital cost as its in addition to full relief on interest.


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    #72
    Obvious Desperate Breakfasts
    Closed Accounts Posts: 8,474 ✭✭✭Obvious Desperate Breakfasts


    Lexie Black Oaf wrote: »
    There are capital allowances available for buildings for many businesses, this would be essentially tax relief on the capital cost as its in addition to full relief on interest.

    With rental properties, the building is the business though rather than a place in which to conduct the business. So it’s not a valid comparison.


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    #73
    davindub
    Registered Users Posts: 1,447 ✭✭✭davindub


    Lexie Black Oaf wrote: »
    There are capital allowances available for buildings for many businesses, this would be essentially tax relief on the capital cost as its in addition to full relief on interest.

    I hope you are aware that if capital allowances were claimable on dwellings, they would need to be repaid on sale of the asset......


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    #74
    Marcusm
    Registered Users Posts: 10,213 ✭✭✭✭Marcusm


    Lexie Black Oaf wrote: »
    There are capital allowances available for buildings for many businesses, this would be essentially tax relief on the capital cost as its in addition to full relief on interest.

    That’s the capital cost of an asset not the repayment element of a loan. The capital allowance is intended to reflect the diminution in value as a result of the wear and tear on the asset. There is no requirement for it to diminish in value but it does in 99% of the cases of capital allowances. With the exception of hotels, industrial and agricultural buildings, it would not also not be due on structures. No point in rebutting, simply acknowledge a misassumption!


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    #75
    beauf
    Closed Accounts Posts: 22,651 ✭✭✭✭beauf


    robinbird wrote: »
    There will be a big fall in rent levels unless FG has the additional funds available to significantly increase the subsidy to landlords which is currently one billion a year. e.g. as soon as the Dublin airbnb properties came on the rental market in March Eoghan Murphy acted decisively to pay landlords to take 350 off the market again before they negatively affected supply.

    Danger is they may not have the funds to keep rent levels high if there is a recession.

    I missed this. What subsidy? What 350 off the market.


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    #76
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Marcusm wrote: »
    That’s the capital cost of an asset not the repayment element of a loan. The capital allowance is intended to reflect the diminution in value as a result of the wear and tear on the asset. There is no requirement for it to diminish in value but it does in 99% of the cases of capital allowances. With the exception of hotels, industrial and agricultural buildings, it would not also not be due on structures. No point in rebutting, simply acknowledge a misassumption!

    It’s not a misassumption so I won’t be acknowledging it as so.

    Capital allowances give tax relief on the capital cost of a building which basically means you are getting tax relief on your capital repayment.


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    #77
    hmmm
    Registered Users Posts: 11,205 ✭✭✭✭hmmm


    I'd be glad that they've opened with 1400, it could be an awful lot worse. Many will start with zero.

    If I was in your shoes I'd happily accept the 1400, don't make a quibble about it - that is if you want them as long-term renters which they sound happy to be. I certainly wouldn't start taking money from a deposit, and if you pulled that trick on me I'd be out of there first chance I get.


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    #78
    Obvious Desperate Breakfasts
    Closed Accounts Posts: 8,474 ✭✭✭Obvious Desperate Breakfasts


    Lexie Black Oaf wrote: »
    It’s not a misassumption so I won’t be acknowledging it as so.

    Capital allowances give tax relief on the capital cost of a building which basically means you are getting tax relief on your capital repayment.

    Think about what you are saying when you say that capital repayments should be tax-deductible. If you owned a rental property outright, would you be happy having to pay a lot more tax on your rental income than somebody who holds a mortgage on their rental property? I seriously doubt you would. Why should outright owners be penalised like that?


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    #79
    Pawwed Rig
    Moderators, Category Moderators, Home & Garden Moderators, Recreation & Hobbies Moderators, Social & Fun Moderators Posts: 22,298 CMod ✭✭✭✭Pawwed Rig


    Obvious Desperate Breakfasts wrote: »
    Think about what you are saying when you say that capital repayments should be tax-deductible. If you owned a rental property outright, would you be happy having to pay a lot more tax on your rental income than somebody who holds a mortgage on their rental property? I seriously doubt you would. Why should outright owners be penalised like that?

    The magnitude of capital allowances have no bearing on the amount of an asset you own or don't own.


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    #80
    Obvious Desperate Breakfasts
    Closed Accounts Posts: 8,474 ✭✭✭Obvious Desperate Breakfasts


    Pawwed Rig wrote: »
    The magnitude of capital allowances have no bearing on the amount of an asset you own or don't own.

    I’m simply talking about how much tax is paid. That other poster is saying that capital repayments should be fully tax-deductible. I’m saying somebody who owns their house outright has no capital repayments to deduct from pre-tax revenue, therefore will pay more tax. A lot more.

    I’m not sure what your point is re: ownership. How does that relate to what that poster is proposing?


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    #81
    Pawwed Rig
    Moderators, Category Moderators, Home & Garden Moderators, Recreation & Hobbies Moderators, Social & Fun Moderators Posts: 22,298 CMod ✭✭✭✭Pawwed Rig


    Not sure what your point is then tbh but either way it doesn't matter as you cannot claim CA on a residential premises anyway.


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    #82
    Obvious Desperate Breakfasts
    Closed Accounts Posts: 8,474 ✭✭✭Obvious Desperate Breakfasts


    Pawwed Rig wrote: »
    Not sure what your point is then tbh but either way it doesn't matter as you cannot claim CA on a residential premises anyway.

    I don’t know what the confusion is.

    Capital repayments aren’t tax-deductible on rental properties.
    Nox thinks they should be.
    Capital repayments being deducted would greatly reduce the tax bill for mortgage holders.
    Non-mortgage holders would not qualify for that considerable deduction and would therefore pay a lot more tax on the their rental income.

    Maybe some people think that’s okay but I very much doubt if Nox owned a rental property outright, that he’d be happy paying way more tax on rental income that somebody who is servicing a mortgage. I’ve pointed this out to him before and got no response because I doubt he can square it in his head.


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    #83
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    Obvious Desperate Breakfasts wrote: »
    Think about what you are saying when you say that capital repayments should be tax-deductible. If you owned a rental property outright, would you be happy having to pay a lot more tax on your rental income than somebody who holds a mortgage on their rental property? I seriously doubt you would. Why should outright owners be penalised like that?

    It would all have to be looked at. The taxation strategy for LLs needs serious overhaul as the rates are far too high. Taxation at marginal rate needs to be scrapped and a much lower flat rate for example, far more deduction allowable which would be available to other businesses but no to a LL (not referring to CA here there are many more) etc.


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    #84
    Scoundrel
    Registered Users Posts: 1,435 ✭✭✭Scoundrel


    The kind heartedness and public spirit of Irish landlords always amazes me they constantly say there's no money/profit in it yet they continue to rent out properties out of the goodness of their own hearts never making a profit according to themselves! Bravo you unsung heroes.


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    #85
    Claw Hammer
    Registered Users Posts: 6,163 ✭✭✭Claw Hammer


    Scoundrel wrote: »
    The kind heartedness and public spirit of Irish landlords always amazes me they constantly say there's no money/profit in it yet they continue to rent out properties out of the goodness of their own hearts never making a profit according to themselves! Bravo you unsung heroes.

    If it wasn't for them tenants would be on the side of the road.


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    #86
    Obvious Desperate Breakfasts
    Closed Accounts Posts: 8,474 ✭✭✭Obvious Desperate Breakfasts


    Lexie Black Oaf wrote: »
    It would all have to be looked at. The taxation strategy for LLs needs serious overhaul as the rates are far too high. Taxation at marginal rate needs to be scrapped and a much lower flat rate for example, far more deduction allowable which would be available to other businesses but no to a LL (not referring to CA here there are many more) etc.

    How would you make up the shortfall on all these tax cuts? Genuine question though possibly outside the scope of this subforum.


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    #87
    beauf
    Closed Accounts Posts: 22,651 ✭✭✭✭beauf


    Obvious Desperate Breakfasts wrote: »
    How would you make up the shortfall on all these tax cuts? Genuine question though possibly outside the scope of this subforum.

    This thread has long left what ever it was about at the start. :D


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    #88
    Scoundrel
    Registered Users Posts: 1,435 ✭✭✭Scoundrel


    <SNIP>


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    #89
    Obvious Desperate Breakfasts
    Closed Accounts Posts: 8,474 ✭✭✭Obvious Desperate Breakfasts


    beauf wrote: »
    This thread has long left what ever it was about at the start. :D

    We Irish love to ramble on interminably. :D I’m reminded of that every time I visit the UK. On every visit, I get at least one person staring at me with puzzlement as I shite on about this and that.


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    #90
    The Cool
    Registered Users Posts: 1,094 ✭✭✭The Cool


    Good god this is a bleak thread. There's a horrible attitude here of, how dare they, make sure they don't scam you, the cheek of them etc. Bear in mind, they have simply requested a reduction, of 18%. They are out of their jobs and are trying to keep all bases covered while also trying to do right by you. Give them some credit, they are clearly trying to work with you on this.

    Can I ask - what did you get in rent for this property 5-10 years ago? I'd imagine a fair bit less, though would I be right in saying your mortgage costs etc would stay the same? To explain what I mean - the house I rented in 2014 for €900 is now up on Daft for €1700. If yours has increased in price with the same scale over the years, how were you managing back then? Bear in mind we are looking at another recession coming at us - if you lose these tenants, depending on when you are replacing them, your market value could be back down to €1400 anyway. I would keep them on with their lease for €1700 in good faith that by June or July they'll be back to paying rent in full.

    For what it's worth, I rent with my Oh for €1450 a month. His job and salary are secure. I'm self employed and have lost all my work so am on the Covid payment. Bear in mind that there are only 6 weekly installments of it, I have 3 left, but little to nothing coming in from invoices until July at least. Our landlords have fully cancelled our rent for the time being, on their own initiative, which we absolutely appreciate is very very kind. As a result, we'll make a point of doing some extra bits around the house, freshening up paint, servicing things etc. We had been considering moving this year, but won't now, because we don't want to hand them notice so quickly after them being so kind. Just trying to be sound tenants. Sounds like yours are the same.


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    #91
    beauf
    Closed Accounts Posts: 22,651 ✭✭✭✭beauf


    The Cool wrote: »
    Good god this is a bleak thread. There's a horrible attitude here of, how dare they, make sure they don't scam you, the cheek of them etc. Bear in mind, they have simply requested a reduction, of 18%. They are out of their jobs and are trying to keep all bases covered while also trying to do right by you. Give them some credit, they are clearly trying to work with you on this. ....

    Sounds like the rental is no longer sustainable. The LL is effectively broke (taking what was posted at face value) and should sell up at the first opportunity and start over.


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