Rent a room 14K tax free scheme to be extended to SW recipients

YipeeDee

So let me get this straight.

The big corporate investor LLs who are supposed to pay just 12.5% tax are paying little or no tax at all.

Homeowners renting rooms can earn 14K tax free and not be bound by tenancy legislation and standards.

Now social welfare tenants who are getting the lion’s share of their rent paid for them by the State can also make 14K tax free renting out rooms in council homes. That’s along with any and all other benefits remaining intact.

What kind of mugs are small landlords renting out one or two properties, paying 52% tax and risking enduring two years of no rent, trying to get non paying tenants removed. And sure if they smash up the property, it’s just tough luck!

You’d want to be stark raving mad to rent out a property in this crazy system.

We should all just get out, sign on the dole, get a cut priced rented council house, medical card, fuel allowance, back to school allowance etc and 14K a year renting out rooms.

Being a small landlord in Ireland is a mugs game.

(Edit At time of posting I had interpreted the article as applying to SW tenants living in State supplied social housing. I have since been kindly informed that it’s not applicable to SW “tenants” . I stand corrected on that)

https://www.newstalk.com/news/welfare-recipients-to-be-allowed-to-earn-extra-income-renting-out-a-room-1344375?utm_medium=Social&utm_source=Facebook&fbclid=IwAR0_kai5H23IDGrsN_0nEpPTgAEOz0oyJ9mJEWYVykmu4xywf_idxk29yAs#Echobox=1652942375-1

CrookedJack

https://www.boards.ie/discussion/2058246516/rent-a-room-14k-tax-free-scheme-to-be-extended-to-sw-tenants

Or you could sell your investment property, and let someone move into it, taking a family off the social welfare list. You don't have to be a mug, I don't have to pay for someone to rent from you, the country has more money to spend on services. Win win win.

YipeeDee

https://www.boards.ie/discussion/comment/119085000#Comment_119085000

Nope, won’t be selling my property, it’s for my kids when they’re ready to move in. And it wasn’t purchased as an “investment property”. It was my first home, I lived there.

And BTW, the only people paying to rent from me are my two tenants. Rest assured, you’re not paying a cent towards their rent.

Would be better off to let it stand idle at this stage.

average_runner

https://www.boards.ie/discussion/comment/119085000#Comment_119085000

Its not win win. If all landlords sell there be no properties to rent, this is what happened 12 years ago. Except the position we are in now will be worst.

CrookedJack

https://www.boards.ie/discussion/comment/119085031#Comment_119085031

That's not what I suggested, and that's not what happened 12 years ago. It's just hyperbole.

https://www.boards.ie/discussion/comment/119085021#Comment_119085021

Well then how are you the mug? You get to give your kids a property, that will be at least partially paid for by someone else. And the someone else likely directly or indirectly subsidised by taxpayer money, so able to pay you more. Unless you think your rental income should be tax-free and so your gift to your children to be even more directly paid for by the rest of us?

It really doesn't sound like you're the mug here.

YipeeDee

https://www.boards.ie/discussion/comment/119085080#Comment_119085080

Wrong again sunshine, nobody else paid for my property but me.

I bought and paid for my ex home in FULL 25 years ago.

I only began renting it out four years ago, my tenants weren’t even born when I had my house paid for in full.

And no, their rent is not subsidised by taxpayers, they are paying their rent from their own pockets.

So, dear, you have not paid a single cent towards the house I shall be giving to my kids.

And I said nothing about wanting to rent it tax free, do not put words into my mouth.

I am pointing out how inequitable the system is for small time landlords who are getting screwed for 52% tax whilst corporates, other property owners and now, even SW tenants can rent out without any such tax burden.

CrookedJack

https://www.boards.ie/discussion/comment/119085168#Comment_119085168

Great, good for you then. You're a great case for rental income being taxed as it is purely income generated from your wealth. Still can't see how you're a mug though.

Donald Trump

There would be no law against you setting up your own business officially and availing of those 12.5% corporate tax rates.

The reason people generally do not do so, is that you are stung on the other end anyway - when you take any money out of the business for your own use, you are taxed on it then at your marginal rate. The same as any existing business.

The system, of which you appear to be so critical, appears to have afforded you a number of properties which are fully paid for. If you think that you would be better off giving those away so that you have no assets, and then getting yourself on the dole, you can actually do that if you want to.

Why is it a common theme that you see that amateur landlords think their additional income should be tax exempt? I find it quite strange. If I was a schoolteacher and invested in a restaurant, I don't think I'd be assuming that I shouldn't have to pay income tax on the income from the restaurant. If I was a mechanic and set up a sideline car-hire business, I wouldn't expect for my sideline income to be tax free.

YipeeDee

https://www.boards.ie/discussion/comment/119085225#Comment_119085225

So what you’re saying is, citizens who’ve busted their butts to pay for their own property should continue to be penalised by an unequitable tax system.

Meanwhile citizens who may never have worked a day in their lives, been handed their income by the State, given a home for a fraction of the rent, handed medical cards, fuel allowances, back to school allowances etc should now be handed the added bonus of making 14K tax free from a home that other taxpayers have paid for, and continue to support them in?

Makes me wonder why anyone bothers to get off their arse and work at all.

Donald Trump

https://www.boards.ie/discussion/comment/119085336#Comment_119085336

As I pointed out, it would be trivial for you to put yourself into their shoes should you so wish. There are plenty of charities etc that would gladly accept a gift of your properties. You could then organise to be fired from your job (if you still work) and go on the dole and get yourself a free house.

You can put yourself into their shoes very quickly. They can't put themselves into yours quite as quickly

YipeeDee

https://www.boards.ie/discussion/comment/119085373#Comment_119085373

Oh, spare me that one.

I grew up in a corporation estate and watched almost every girl I went to school with, walk from the school gate to the SW office to sign on. And then proceed to pop out kids one after the other in order to get bumped up the social housing list.

Whilst I was busting my butt working and saving every penny I could to put a roof over my own head,

They we’re jetting off on foreign holidays and having their income and benefits handed to them on a plate.

They could have very easily put themselves “into my shoes” as you put it, if they’d got off their arse and worked.

But they didn’t, and why would they?

There is no incentive for people to provide for themselves in this country.

The opposite applies, you’re penalised by the tax system for providing for yourself.

Donald Trump

https://www.boards.ie/discussion/comment/119085510#Comment_119085510

I find that those least capable are more likely to attribute their luck to either hard work or genius.

Again, to repeat, you can put yourself into their shoes tomorrow if you want. And you can also avail of the 14k tax free income today if you want.

Be careful what you wish for!!!

average_runner

https://www.boards.ie/discussion/comment/119085080#Comment_119085080

It is what happened 12 years ago. Alot of landlords got pissed off with the government as brought in a rent ceiling but wouldn't bring in a min rent during the property crisis when rent went through the floor.

So there was protection for the tenants but not the landlord, so once the property crisis ended, alot of landlords sold their properties and got out of that business.

CrookedJack

https://www.boards.ie/discussion/comment/119085336#Comment_119085336

Only children think of tax as a punishment. The tax system is designed to be inequitable as wealth is unequal. Are you honestly suggesting we should tax people by how hard they worked in the past? Seems silly to me.

Whereas taxing people who have wealth and are using it to generate income seems perfectly fair.

How does paying a reasonable amount of tax on income generated by your wealth make you a mug?

YipeeDee

https://www.boards.ie/discussion/comment/119085523#Comment_119085523

What I’d “wish for” is an equitable tax system that doesn’t screw one set of citizens who’ve worked for everything they own. In order to provide for another set of citizens, many of whom have had their lifestyle handed to them since the day they left school. Or at the very least, make this 14K tax free allowance available to every citizen in the country equally that provides accommodation for rent.

1874

https://www.boards.ie/discussion/comment/119085332#Comment_119085332

why tax exempt or some form of it would be a good idea for small landlords,

Because they are funding and taking all the risk of providing property which the State and thereby the taxpayer would otherwise have to fund, thats not to say there arent problems with private rented property, there certainly are risks for those providing the service.

The State has no problem allowing vulture funds away with zero tax liability, where the profits go outside the state (and given there is little or no tax paid, why are people so opposed to where that would be most likely only reinvested or spent withing Ireland?).

I'd have no issue with social tenants not having allowances affected by letting a room, but I think there should be conditions, such as they pay the liability for any additional insurance or better still obliged to take it out themselves for any additional people, potentially agreement from the landlord as wear and tear would be increased, and so long as the number of people was not incompatible with the property, ie too many people or vehicles, which could be a safety concern or affect others living nearby (noise or no space for vehicles).

My problem with the 14k allowance, especially as it is now given to SW tenants is how it is implemented.

It's a 14k allowance, it should stay that way, if you earn anything over 14k the entire amount is taxed, that's ridiculous, it would be simpler to enforce and encourage people to be more open and honest if the 14k limit was tax free regardless, anything over that could be taxed at X value, not necessarily the marginal rate someone pays but something defined, and it should be possible to do a basic return online for it, no hardcopy form filling or making it complicated needing an accountant, just a guided online process.

I think it would open the possibility of making more rooms available to the market more significantly, when people think they might get the hassle of dealing with the Revenue, I think they weigh the hassle and inconvenience and just wont bother.

tscul32

Will the 14k be taken into account for social welfare benefits? Like when assessing household income for means testing. I presume many of these tenants aren't in paid employment so even if it was liable to income tax they'd barely have a tax bill for 14k.

Donald Trump

https://www.boards.ie/discussion/comment/119085667#Comment_119085667

The risk is idiosyncratic and therefore should not be compensated.

It is the one completely passive and capitalistic income and it amazes me that people think they should be allowed to get it tax free.

Donald Trump

https://www.boards.ie/discussion/comment/119085648#Comment_119085648

It is available to you. Has been for years. It's nobody's fault but your own if you did not know it

1874

Why is it a common theme that you see that amateur landlords think their additional income should be tax exempt? I find it quite strange. If I was a schoolteacher and invested in a restaurant, I don't think I'd be assuming that I shouldn't have to pay income tax on the income from the restaurant. If I was a mechanic and set up a sideline car-hire business, I wouldn't expect for my sideline income to be tax free.

It isn't essential for people to go to a restaurant, the State don't need to provide people restaurants to eat at, If the State wont invest in the cost of providing houses (thereby saving the taxpayer in the shortterm at least), and a private citizen does, why are some so adverse to the provider treating it like a business and making a profit? or be bilked for tax. If you apply your logic to Restaurants, the owners should just feed people if the State aren't, no profit is allowed to be made, people can come in and vandalise the place or eat and not pay without being thrown out or pursued for costs. You certainly cant write off costs in rental accomodation like a business such as a restaurant can, even to improve it.

YipeeDee

https://www.boards.ie/discussion/comment/119085332#Comment_119085332

If this comment was directed to me.

1. I don’t know where you’re getting “a number properties fully paid for? I rent one single property, that was my first home.
2. I have said nothing about expecting rental income to be “tax excempt”. Don’t put words into my mouth. I’ve repeatedly said I’d like to see an “equitable” tax system. Since when does “equitable” equate to “tax exempt”?

Donald Trump

https://www.boards.ie/discussion/comment/119085707#Comment_119085707

Hold on now. It is likely that all you did was go to a bank, fill out a form and borrow other people's capital to outbid someone else for an already built house.

Don't be over-estimating your own societal contribution in being able to fill out a form and then being able to figure out that 205 was a number bigger than the 200 the next bidder was offering.

If you don't know how to write off costs against your rental income, hire a better accountant.

1874

https://www.boards.ie/discussion/comment/119085678#Comment_119085678

I think that is the point, I thought it was available to them already (it certainly is for ordinary private paying tenants) but I take from this that their benefit may be means tested and now it is just being made official that this wont affect their SW entitlements

YipeeDee

https://www.boards.ie/discussion/comment/119085678#Comment_119085678

The article states “The monthly payment is exempt from tax and is excluded from social welfare means testing”.

So looks like their 14K tax free allowance won’t affect their SW money and benefits.

1874

https://www.boards.ie/discussion/comment/119085694#Comment_119085694

But in a capitalistic system, you feel its ok for a business (a vulture fund) to not pay tax? but a small time landlord or private person cannot avail of such a thing?

Im not saying fund people through a system because there is risk, that risk should be limited by real measures, such as rules and laws, Im saying if someone is providing housing which if they are doing whether they are renting out a complete property or rooms, they have provided the funds to do that from after tax income already, collectively those people are saving the State and taxpayer billions from the state building and providing housing.

Effectively the State agrees with this already, otherwise why is there tax exempt status for vulture funds? because the state knows they have to incentivise them to provide the funds and they are (have to be) compensated ongoing, OR they would not turn up here OR latterly would close up shop. Why are some people so opposed to this being offered to people, citizens withing the State?

Donald Trump

https://www.boards.ie/discussion/comment/119085737#Comment_119085737

Nothing stopping you from setting up a business.

You'll learn the hard way though that you will be taxed upon taking your money out of the business. When it stays inside the business, it is subject to business taxation rules. Once it flows out into your pocket so that you can spend it on coke and hookers, then it becomes subject to your personal tax at that point.

YipeeDee

https://www.boards.ie/discussion/comment/119085705#Comment_119085705

I said “Every citizen that rents out accommodation “.

So if one citizen rents a room and another citizen rents one house, in an equitable system both would receive the same tax allowance. Especially when the former are having the property provided for them, for the most part, by the State.

Donald Trump

https://www.boards.ie/discussion/comment/119085801#Comment_119085801

No. Those two things are only the same in your head because you want them to be. But that is only in your head.

You are free to rent out a room or rooms in your house, and once that is your only rental income, that is 14k tax free. Same as anyone else can. You can't decide to unilaterally apply that to whatever different random conditions suit you personally and whinge if you can't do that.

YipeeDee

https://www.boards.ie/discussion/comment/119085808#Comment_119085808

Well it would appear that I’m not alone in my “whinging” then, as small LL’s are exiting the market in their droves.

And the primary reason they’re giving for leaving is “high taxation” followed by onerous legislation.

And of course the rise in house prices.

Handing citizens, many of whom have never worked a day in their life, a 14K tax free allowance to rent out accommodation in a property that they don’t own, and is provided for them for the most part by the State, is just another slap in the face for small time LL’s.

And yet, another reason why, after my current tenants leave, I won’t be renting out my *one and only rental property again.

CrookedJack

https://www.boards.ie/discussion/comment/119085678#Comment_119085678

In fact this is all the article is saying. Recipients of social welfare benefits will be able to earn 14k in room rental without it affecting their means test.

Not, as the OP mistakenly says, that "SW Tenants" will be able to rent out rooms suddenly and earn 14K tax free.

This is a sensible idea to allow people with pensions, or other Social welfare payments, who own their own homes, to rent out rooms where previously they wouldn't due to losing their benefits.

OP is just using this as a pretext to then rail against "SW tenants" and the fact he has to pay income tax like the rest of us.

Donald Trump

https://www.boards.ie/discussion/comment/119085944#Comment_119085944

100% up to you. Hopefully the councils will start enforcing proper vacant property levies too at some point in the future. Planning permission is a licence afforded by the State for a particular purpose and the State is fully entitled to make sure that the corresponding implicit obligations are fulfilled.