If you have a new account but are having problems posting or verifying your account, please email us on [email protected] for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact [email protected]

Calculating Tax on Rental

  • 21-10-2022 1:12pm
    Registered Users Posts: 10

    keep it quick , posting for a friend who doesn't have a boards account

    friend has a house he rents out for the past 10 years to same family

    now he's not registered with prtrb or paying tax ( yes a big no no )

    he want's to register and pay tax etc

    he has a 4 bed that he's renting for €1500 in an area where 3 beds are going for €2000 so he's not getting market value

    his current tenant is having difficulty ( only recently ) and suggested he might get hap or some other help

    so my friend wants to get X for the rent and have enough to cover mortgage and tax and prtb related costs

    how does he calculate how much he will pay a year in tax and other charges ? is there an online calculater to imput figures he wants to best cover himself going forward as he doesn't want to be subsidising the house going forward



  • Registered Users Posts: 10 Negative_Nat

    rest of us ( well get a proper job and buy a house ffs )

    in this market rightly or wrongly he is under-charging a tenant , and HIS tenant is having difficulty and mentioned Hap not the landlord ( makes sense why its " rest of us " ) when you obviously can't read

    why shouldn't a lanlord cover his back ??

    why go to an accountant sure boardsie's all know the facts

  • Registered Users Posts: 2,239 ✭✭✭Ninthlife

    Well he isn't really losing out by 'undercharging' the tenant as he is pocketing the €1500 per month in full whereas a similar landlord registered for Income Tax and charging €2000 p/m isn't going to be getting anywhere near €1500 in the pocket

    Considering they are in employment and possibly paying the higher rate of tax already they can expect all the rental income to be taxed at 40%

    They may also want to consider filing for previous years as someone may wonder what he was doing with the property in previous years and if the tenant wants to claim HAP they may be asked where they were living previously etc

    Might be in for a shock with a very large tax bill plus interest and penalties

  • Registered Users Posts: 12,853 ✭✭✭✭Geuze

    To determine the tax, you must first calculate the net rental profits.

    Net rental profits = gross rental income less allowable expenses

  • Registered Users Posts: 10 Negative_Nat

    ok , appreciate the response , straight to the point

  • Advertisement
  • Registered Users Posts: 10 Negative_Nat

    its pretty much 18000 a year i'd say , so he will lose €7200 a year tax ( if he has repairs or maintenance or insurance that comes off the €18000 then 40 % after ? )

  • Registered Users Posts: 10 Negative_Nat

    so if he wanted his usual €1500 a month he's need to charge approx €2200 to cover tax etc

  • Registered Users Posts: 12,853 ✭✭✭✭Geuze

    18,000 gross rent

    less allowable expenses like maintenance, repairs, mortgage interest, capital allowances, etc.

    Then apply his marginal tax rate to the net rental profits.

    I would be worried about the Revenue's attitude to ten year's tax evasion.

  • Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 66,422 Mod ✭✭✭✭L1011

    If the house is in an RPZ the rent cannot be increased that much - that the tenancy wasn't registered doesn't mean it didn't exist.

    Think ~1700 is the most it can possibly be increased to. And he can't refuse HAP on the basis of not being registered either.

    Recent refusal of HAP cases have been in the 7.5k-10k compensation region.

  • Registered Users Posts: 6,075 ✭✭✭Claw Hammer

    He is going to have to file accounts for the last 10 years and pay interest and penalties. The sooner he gets to an accountant who deals with arrears cases the better.

  • Advertisement
  • Registered Users Posts: 5,753 ✭✭✭Tow

    This is some FUBAR. I like how no one adds PRSI and USC on to the 40% tax, you must all work for the Revenue 😜.

  • Registered Users Posts: 10 Negative_Nat

    all abide by the law apparently and never outside the lines

  • Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 66,422 Mod ✭✭✭✭L1011

    There's 'outside the lines', and there's being so far away you can't even see the line.

    This is going to be very, very expensive for the landlord no matter what happens.

  • Registered Users Posts: 10 Negative_Nat

    i know he gets €18000 a year rent , but lets say he pays €12000 a year mortgage , is he not liable for tax on pure profit ie €6000

  • Registered Users Posts: 10,073 ✭✭✭✭Dodge

    To be fair, it was your mate thinking he was being hard done by, while actually doing way better than others, that caused this thread.

    And you did ask about tax implications. You got the answer.

  • Registered Users Posts: 10 Negative_Nat


    but they all act like they are holy on here and never break the laws

    maybe he'll keep it under the radar and have a fully paid asset in 10 years

  • Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 66,422 Mod ✭✭✭✭L1011

    No. Only interest payments can be deducted, and only for a registered tenancy.

    Mortgage capital is not an allowable expense.

  • Registered Users Posts: 1,056 ✭✭✭DubCount

    OP. You set up a boards account in the last few weeks - cant your friend do the same?

    Register with RTB

    Employ an accountant to get tax compliance in order (including 10 years of updated tax declarations)

    Going forward, rent that can be charged is calculated by reference to RPZ if applicable or market rent if RPZ does not apply. Covering tax and mortgage is not a basis to calculate a rent review.

    Your friend may have to sell the property to pay the tax, interest and penalties. Here's hoping.....

  • Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 66,422 Mod ✭✭✭✭L1011

    Or he'll get stung when he refuses HAP to the tenant, they take a case and get 10k compensation and he gets chased for unpaid registration, taxes, interest and penalties.

    And that is much more likely than continuing to get away with it.

  • Registered Users Posts: 10 Negative_Nat

    isn't the tenant at fault also ? he apparently knows the landlord wasnt paying tax

  • Advertisement
  • Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 66,422 Mod ✭✭✭✭L1011

    The tenant has no responsibility unless they are aware the landlord is out of the country and they are not paying an agent in Ireland; then they need to retain and submit retention tax.

    Otherwise, absolutely not. The landlord is responsible for their own breaches of the law.

  • Registered Users Posts: 3,193 ✭✭✭Eircom_Sucks


  • Registered Users Posts: 2,239 ✭✭✭Ninthlife

    Considering the landlord is knowingly doing it, it could be viewed as 'deliberate behaviour' and possibly could attract a 100% penalty and interest of 0.0274% per day which is about 10% per year for 10 years..

    The potential bill is eye watering

  • Posts: 0 [Deleted User]

    Revenue will pin him to the wall between interest and penalties, he will be lucky to have 25 grand left of that 180 grand by the time they are finished with him. In order to be able to accept HAP he will have to get a tax clearance certificate so an audit of his accounts will occur at some stage and the current tenant will also have to provide details during the application process.

  • Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 66,422 Mod ✭✭✭✭L1011

    ...and to add, that just refusing HAP won't stop the Revenue side of things happening; as they will absolutely notice the RTB decision on the compensation to pay the tenant for refusal; and do their own investigation then.

  • Registered Users Posts: 5,753 ✭✭✭Tow

    Plus if he ends up in front of Nolan a visit to the Joy.

  • Registered Users Posts: 5,996 ✭✭✭handlemaster

    He can well afford to pay for an accountant. Avoiding tax while pulling in that amount of rent is an insult to law abiding landlords. He needs to make a declaration to revenue. As for wanting to add more to cover taxes etc well well.. getting the popcorn for this one...

  • Registered Users Posts: 2,239 ✭✭✭Ninthlife

    Also remember if they do sell there willl be Capital Gains Tax possibly owing and it wont be exempt as its not their Principle Private Residence. So possibly the question will be asked well what was the house used as for x amount of years if it isnt your PPR.

    Also their details will be published on Tax Defaulters list which could have implications elsewhere

    Post edited by Ninthlife on

  • Registered Users Posts: 7,667 ✭✭✭Grumpypants

    As a general rule. Take the rent he gets and half it. That's the tax you pay.

  • Advertisement
  • Registered Users Posts: 307 ✭✭ThreeGreens

    Having a fully paid off asset would be ideal as far as revenue are concerned. In 10 years time the taxes interest and penalties would be very significant. Probably more than the value of the property.

    Assuming the tax defaulter can't pay the tax, Revenue usually get a judgement mortgage in such cases. A fully paid off asset would be ideal as far as Revenue are concerned as they wouldn't have any bank mortgage ranking before them.

    Being an unregistered landlord is very dangerous these days. More so next year. You can't get hap without a tax clearance cert. You can't refuse a hap tenant. And any complaint to RTB will be picked up by Revenue. The complaint can be after the tenant left.

    And next year with rental tax credits, your tenant will be (perhaps unwittingly) reporting the rent payments you Revenue to claim their credit.

    Even if you reach an agreement with them not to claim it, they have 4 years to claim it. So potentially after they have left the property.

    And of course you can never fallout with your tenant no matter how unreasonable they are because they will then just report you to revenue and the RTB.

    Best thing your friend can do is book and appointment to see an accountant and regularise their affairs. The accountants fees are a valid expense reducing their tax bill.