McGrath statement of tax changes for landlords. Same as last year. Will never happen.

DownByTheGarden

https://www.thejournal.ie/michael-mcgrath-landlord-tax-treatment-changes-6065356-May2023/

Im going to go out on a limb here and say that this is exactly the same as they did last year.

Make an announcement so that landlords wait for the budget and in the meantime lock them in some other way. Come budget day, not a bean for them.

Last year they were planning on extending the eviction ban but obviously got info from the AG that they couldnt do this.

And even if by some act of God they did bring in better tax changes for landlords there would be so many hoops to jump through to get them that hardly anyone would benefit. Either make the tax situation better or dont. Dont complicate it. And if you can talk about it, the same as they have been for over a year now, they can surely splel out what they are going to be at this point.

I call bullsh!t on it. And I think any landlords who are not out yet would be wise to get out while they can. This is just a ploy to keep them in for a few more months so they can come up with some new ban, maybe forever.

herbalplants

I think it is too late already!

Lots of apartments for sale at the minute all landlords selling.

DubCount

Tax incentives for landlords is a numbers game. How much does the state sacrifice in tax revenue, vs how many landlords will be kept in the market, or how many new landlords will enter the market. For me, its hard to see this ever balance in a way which will make sense. Thats because tax is not the main reason landlords are leaving.

Besides, giving landlords tax breaks is very unpopular. While Joe and Jackie public are struggling with cost of living issues and their own financial constraints, giving tax breaks to Landlords ("who are already rich fat cats living off the poverty of others") is political madness - especially as we get closer to general election time. Can you imagine Mary Lou responding to that budget speech.

I reckon there will be no tax changes, and if there are any, they will come with more terms and conditions than you shake a stick at.

I also reckon there will be another Winter Eviction ban for 2023/24 - cant have people being turfed out in the cold weather, and sure its only temporary.

Claw Hammer

Tax is a relatively small issue for landlords. Recovery of possession and the liquidity of the asset are the big ones.

antoinolachtnai

https://www.boards.ie/discussion/comment/120587334#Comment_120587334

Tax makes a massive difference.

Possession doesn’t matter if you can make enough after-tax rent with the current tenant

You can always sell the property with tenant in situ to another landlord if the after-tax rent is high.

DubCount

https://www.boards.ie/discussion/comment/120587669#Comment_120587669

I'd guess you are not a landlord !!

antoinolachtnai

Not correct.

https://www.boards.ie/discussion/comment/120587776#Comment_120587776

spaceHopper

I think the damage is done and nothing will undo it. LL's are getting out or keeping property empty to see what happens. There is to much abuse online to easy for the next government to make things worse.

ingo1984

https://www.boards.ie/discussion/comment/120587302#Comment_120587302

I totally agree that they will reintroduce the eviction ban for winter months and this will become an annual occurrence. They do have it in other countries also.

The Spider

https://www.boards.ie/discussion/comment/120587302#Comment_120587302

A lot of landlords are not rich fat cats, either accidental or have another property. I do think however tax breaks wouldn’t be popular with the general public. I also agree that they’ll try go for another eviction ban.

I foresee landlords ramping up evictions and trying to sell before October Downbythegarden is right on this, they’ll pull the plug on any promises right before the budget and lock them in with another ban, he’s right as well in that it could be time to get out.

If you work overtime you pay tax at your marginal rate.

If you work a second job pay tax at your marginal rate.

If you set up a side business you pay tax at your marginal rate.

But landlords think that their additional income should be treated differently to the above?

antoinolachtnai

https://www.boards.ie/discussion/comment/120590170#Comment_120590170

For the same reason that there are caps on rents and special protections for tenants.

That is, to improve the welfare of tenants. If landlords don’t have a reason to stay in the business, they’ll sell to FTBs and tenants will have to find somewhere else

DownByTheGarden

https://www.boards.ie/discussion/comment/120590170#Comment_120590170

Newsflash. Landlords dont really care at all about the tax. Its the inability to maintain control over their asset and their inability to make a profit on it. Combine that with the immense risk of it all going wrong and tax is small potatoes.

https://www.boards.ie/discussion/comment/120590410#Comment_120590410

What cap on rent is there in Ireland?

https://www.boards.ie/discussion/comment/120590420#Comment_120590420

Newsflash. Whoever started this thread clearly cares about the taxation of their rental property.

DownByTheGarden

https://www.boards.ie/discussion/comment/120590444#Comment_120590444

I started the thread. If you want to stalk me you'll see that I used to be a landlord but I am not anymore. So not too concerned about my tax as a landlord. If you read the OP properly you will see that I am calling bullsh!t on McGrath becasue I think hes just making a thinly veiled attempt to stop landlords leaving until they can get the new legislative handcuffs on to any remaining landlords. Like most people in government he either doesnt see what the real problems are or he is afraid to say what they are.

I doubt very much it will work tbh. Do you think it will work?

https://www.boards.ie/discussion/comment/120590472#Comment_120590472

My bad, I didn't look at the username.

I've never been a landlord, toyed with the idea briefly bit knocked it on the head purely because of the risk of tenants overholding, not paying rent, damaging the property, and being encouraged or applauded by the likes of Threshold.

I would be in favour of a properly structured RTB enforcing proper regulations and inspections on both landlords and tenants, and properly regulating the market.

I would not be in favour of preferential tax treatment for landlords. Particularly when the laughable and utterly useless rent tax credit for tenants isn't as generous as what some landlords are clamouring for. (I'm not a tenant either for clarity).

antoinolachtnai

https://www.boards.ie/discussion/comment/120590440#Comment_120590440

Rent on a home in an RPZ is capped relative to the price in 2015. You can only increase by a certain percent per year.

DownByTheGarden

https://www.boards.ie/discussion/comment/120590508#Comment_120590508

Well I doubt we are going to get any of those things tbh. The tax would be the easiest to do because they would basically have to do nothing about the risk profile. But that alone will still never work. not that this is anything but a wind up by McGrath before he springs the trap on the remaining landlords.

Fred Cryton

What's needed here is very straight-forward - match the €14k tax relief for renting a room in your house. And landlords could only apply it once so a landlord with 10 houses would also only get 14k relief on one home, not on each of the 10.

Irish politicians are fundamentally populist so anything that benefits landlords is just so hard for them do, even if society benefits as a result.

Same with Capital gains tax. All the evidence is that if this was cut from 33% to 20%, that would actually bring in MORE revenue to the exchequer due to increased transactions. But will they ever do it, very doubtful.

DownByTheGarden

https://www.boards.ie/discussion/comment/120599170#Comment_120599170

That would be the easiest alright, but they will make it so complicated that few will actually get it if they were even going to do it.

alias no.9

https://www.boards.ie/discussion/comment/120599170#Comment_120599170

The €14k only applies when the total rent and any contribution to utilities is under the €14k, as soon as that threshold is exceeded, all of it is taxable. It may initially seem worthwhile to reduce the rent below the threshold to avail of the relief but would any landlord trust that it not be taken away by the next government while at the same time tightening RPZ controls.

The single biggest thing that is missing is trust. The best thing that could happen is a 10 year commitment to do nothing, no more knee jerk reactions and unintended, but predictable, consequences. You simply cannot solve a supply shortage by tightening regulations.

antoinolachtnai

https://www.boards.ie/discussion/comment/120599170#Comment_120599170

Giving a tax reduction equal to half the difference between the rental price and the market price would be a lot more equitable.

Limiting the allowance to one property is not a good idea. It is important that landlords can sell their property with a tenant in situ. To do that there have to be other landlords who will buy them.

Capital gains tax at 20 percent where you sell with a sitting tenant is a workable idea I suppose. But for a lot of people, capital gains tax isn’t really that much because the appreciation hasn’t been that big.

Fred Cryton

https://www.boards.ie/discussion/comment/120600148#Comment_120600148

That might only be a couple of hundred quid a month benefit to the landlord.

We need the first 14k to be tax free and the rest can be marginally taxed. That's fair.

Even better would be treating it like a business so only have to pay 12.5% corp tax on profits. But that will never happen in a million years.

Emblematic

There should obviously be incentives for individuals to invest in large-scale professional landlords. The problem is that the large number of small landlords in the country mean there's votes in pandering to them even though that is not the way the country should go.

DubCount

https://www.boards.ie/discussion/comment/120601055#Comment_120601055

There are no votes to be had in pandering to landlords of any size.

Even if you hate small landlords, they make up too large a portion of the rental market to ignore. If you want to maintain (or even grow) rental market stock (and give any chance of rents falling), you need something to encourage existing landlords to stay - even small landlords. I just dont think taxation is the answer, because for me its solving the wrong problem.

Fast-track evictions for non-paying, anti-social or overholding tenants. Timeline to abolish RPZs or mechanism for adjusting rent in an RPZ where rent is more than 20% below market rent. Repealing HAP so state contributions continue even if tenant stops their contributions. Paying for a new website for the RTB - one that actually works. IMHO, this type of action would do more for retaining and growing rental supply in Ireland than any tax cut.

DownByTheGarden

https://www.boards.ie/discussion/comment/120601055#Comment_120601055

There is nobody pandering to landlords :)

Fred Cryton

Am i right in saying these tax chagnes for landlords are indeed NOT going to happen? As usual in ireland, all talk and hot air back in March but i see nothing of substance coming in the upcoming budget.

Grumpypants

It will likely offer very little or put it in the wrong place like reducing capital gains that only benefits those that sell up.

They are hoping to kick the can and hope more houses come in stream or people moan about something else.

Anything short of a 14k tax free limit will do nothing.

DownByTheGarden

https://www.boards.ie/discussion/comment/120877303#Comment_120877303

We held on last year for the budget. What fools we were. Didnt make the same mistake this year. Sold up and never so happy.

Fred Cryton

https://www.boards.ie/discussion/comment/120877303#Comment_120877303

Infuriating. Shooting themselves in the foot. Only way to solve the housing crisis is to have more homes and more landlords in the game.

Claw Hammer

The rela problem is not the politicians, it is the civil servants. they begrudge giving anything to landlords. During Covid landlords were thrown to the wolves, resulting in many selling up. I see no indication that situation is likely to change anytime soon.

pod6611

I completely agree. I have a rental property in another country. I have thought of selling it to buy an apartment in Dublin for when my kids go to college and rent it out in the meantime. But it is too risky. My concerns are not tax, rather the lack of protection against difficult tenants, the unfairness of how the rent control zones have been implemented, distrust of what current and future governments will do in this space and lastly how the word landlord is prefaced with greedy in this country. The whole thing is dysfunctional. I would be better off putting my money in a global equity mutual fund in the long run.

Mr Disco

Some gibberish in the indo today

https://m.independent.ie/irish-news/a-free-months-rent-for-the-average-renter-and-tax-cuts-for-mom-and-pop-landlords-housing-minister-darragh-obrien-lays-out-goals/a876243212.html

Grumpypants

Tax cuts tied to income. Prob be a 800 tax credit if your income is under 35k. So useless to anyone that is a landlord.

dennis72

I am a landlord in another country no tax no rtb no politician's meddling tons of competition place has to be desirable to have full occupancy all year no queues to rent

Was a LL in dublin, its a political football first came a 2 year rent freeze despite increased LL taxes, eviction bans, rent caps stupid long bureaucratic processes and no repercussions for someone who breaks up the place and or not pay rent.

Forcing LLs to stay seems to be the play, good luck with that one.

Mr Disco

https://m.independent.ie/irish-news/government-will-consider-including-landlords-in-14000-tax-free-rent-a-room-scheme-housing-minister-says/a1192323608.html

some kite flying

DownByTheGarden

https://www.boards.ie/discussion/comment/121020647#Comment_121020647

This is the absolute least they need to do. And they need to do it without lots of hoops for landlords to jump through. They already have to jump through far too many hoops as it is. Will this arrest the exodus of landlords, maybe some, but not all and it certainly wont even be enough to attract new landlords in.

There will be no supports for landlords, the government have been considering supports for landlords for the last 5 years but have failed to implement any. They throw something out in the press every year to make landlords that are on the fence about selling up consider staying in the rental business for a while longer.

FernandoTorres

I know there isn't a hope of this actually brought in but surely it'd be disastrous for first time buyers unless it's restricted to people who are already landlord's. There's €150bn in household deposits with banks earning nothing so you'd have wealthy people buying up huge amounts of lower cost properties for them and their kids to avail of this, thus driving up prices further in the lower band.

DubCount

The 14k exemption only applies up to the 14k level. At 14,001, the whole amount is taxable. This means any rent over 1166 PCM would be fully taxed. Landlords would face a risk if they reduce rents to hit this target as if the incentive is removed, it would set a new starting point for RPZ calculations.

o1s1n

https://www.boards.ie/discussion/comment/121021060#Comment_121021060

I don't see any mention of the whole lot suddenly becoming taxable if it goes a euro over the 14k, just that the 'first 14k' is tax free.

From that linked article:

'Currently, householders availing of the scheme can rent a room to someone but not pay tax on the first €14,000 in rental income.

This would mean no landlord would pay tax on the first €14,000 of rental income.'

Are you seeing somewhere else a mention of an 'all or nothing' type of thing where you cannot exceed 14k rent a year to avail of the potential scheme?

DownByTheGarden

https://www.boards.ie/discussion/comment/121020980#Comment_121020980

Dont worry. This is not nearly enough to bring anyone who isnt an idiot, reit, council or charity into buying properties to rent.

DubCount

https://www.boards.ie/discussion/comment/121021119#Comment_121021119

AFAIK the current rent a room scheme covers gross income up to 14,000. If you go over by 1 Euro, the whole amount becomes taxable. If they are saying they will extend the scheme to landlords as well, then I assume the same rules will apply. This may mean some landlords may have an incentive to reduce rent to the threshold, but then may get caught in RPZ. For many LLs (including those charging over 2k per month), it will have zero benefit. It might have more impact in rural areas where rents are lower.

FernandoTorres

If it was a 14k cap that would pretty much rule out all of Dublin which surely defeats the purpose? It would just mean everyone chasing an already limited supply in rural areas.

o1s1n

https://www.boards.ie/discussion/comment/121021448#Comment_121021448

Yeah I asked as that would be my situation exactly, if it's 'not 1 cent over 14k' then I'd need to reduce the rent substantially to avail of it - but would be absolutely boned if they then removed it as a tax break and I was stuck at a much lower rental income due to RPZs.

DownByTheGarden

https://www.boards.ie/discussion/comment/121021512#Comment_121021512

Wouldnt surprise me if their plan was some sort of trap alright.

MacDanger

Tax cuts for LLs is nonsense, a complete waste of taxpayers money; making it easier/faster for LLs to evict non-paying / overholding tenants is what's needed

DubCount

https://www.boards.ie/discussion/comment/121021583#Comment_121021583

Of course you are correct, but there are 2 problems with that.

1) The government have a vested interest in keeping the status quo. While someone is overholding, they are not in the homeless stats and the local authority dont have to find emergency accommodation for them. Its easier to let them stay in a private rental past their eviction period. What politician is going to vote for something that will increase homelessness in the short term and put more pressure on Local Authorities again in the short term.

2) Tax breaks sound like they are helping, so the government can say they are dealing with the issue. Whether it works or not is not the point. You'll get the usual statements that "this will encourage more small landlords into the market, and will even encourage some landlords to reduce rents to avail of this tax measure". Sounds great to Joe public and difficult for the opposition to attack. If no landlords take up the tax break because its useless - so much the better (it sounded good and cost very little).

In this case politics will outplay the real solution by some distance.

Fred Cryton

https://www.boards.ie/discussion/comment/121021583#Comment_121021583

Most of the country are similar to this guy...cannot understand the role of incentives to bring more landlords into the market. Only thinking about the direct cost involved. One-dimensional thinking.

Whats actually nonsense is a tax cut for tenants as it simply feeds back into the hands of the landlord through higher rents in the market.

Gumbo

https://www.boards.ie/discussion/comment/120599170#Comment_120599170

Not a chance as once you go over the 14k, the whole becomes taxable.

No LL can drop the rent to 1166 per month at the moment.