Is nobody concerned at all about the amount that the government gets from their rent?

LotharIngum · 28-09-2018 7:58pm #1

IT just struck me about all the anti landlord stuff going around.
Nobody is at all p1ssed at the government for the sheer amount they take from the rent you pay to your landlord.
Over 50%.
Imagine if the government were to forego that tax in return for the landlord reducing the rent.

But think about it folks. Over 50% of what you are paying is going to the government, so they are actually more to blame for your high rent thatn your landlord is.

If they really want to reduce rents, they should think about using a carrot approach and fessing up to how much they are contributing to high rent.

Stick approaches have failed miserably and always will.

If your landlord wants to get €50 more from your rent he has to charge you €100.

Now imagine this. You are paying €14000 rent now. The government forego enough tax to make it cost neutral to your landlord to reduce your rent to €12000.

The landlord still makes the same after tax profit. You are €2000 better off.
The government is €2000 better off for rent allowance tenants and the worse off for working tenants.
The stick just isn't working. All it is doing is convincing landlords to quit. And convincing potential new entrants to stay away.

There would be many ways of achieving this, but buy in from Leo is required. He holds all the power to reduce rents, but he wont budge. Too easy to rake it in and make people who cant work it out for themselves think that the landlords are the bad guys here.

James Bond Junior · 28-09-2018 8:00pm

LotharIngum wrote: »

IT just struck me about all the anti landlord stuff going around.
Nobody is at all p1ssed at the government for the sheer amount they take from the rent you pay to your landlord.
Over 50%.
Imagine if the government were to forego that tax in return for the landlord reducing the rent.

But think about it folks. Over 50% of what you are paying is going to the government, so they are actually more to blame for your high rent thatn your landlord is.

If they really want to reduce rents, they should think about using a carrot approach and fessing up to how much they are contributing to high rent.

Stick approaches have failed miserably and always will.

I often think a lot of the housing crisis could be solved if tax on rental income was reduced to a flat rate in line with VAT. It gives the landlords more room to compete in times of over supply and an incentive for others to enter the rental market in times of under supply.

artanevilla · 28-09-2018 8:00pm

Do you think if taxes were lowed the rents would come down too?

It would just mean the LL gets more of a percentage.

The rent will be what people are willing to pay.

Amirani · 28-09-2018 8:01pm

You could attempt to make this argument for any industry; prices would be halved if the Government eliminated income tax. It's a silly argument.

Should builders not have to pay income tax? If they didn't then they could be employed cheaper and therefore houses could be built cheaper. How about Doctors? Then healthcare would be cheaper.

If you're earning income, you should pay tax on it. End of story.

The solution to the rental issues is increasing supply. I don't think eliminating income tax on activity for a certain segment of the population is the way to do this.

Fanny Wank · 28-09-2018 8:02pm

Over 50% of my bonus went to the govt too. As will next year's payrise (if I get one)

Strangely I rarely if ever hear anyone give out about marginal tax rates for income other than rental.

_Brian · 28-09-2018 8:07pm

artanevilla wrote: »

Do you think if taxes were lowed the rents would come down too?

It would just mean the LL gets more of a percentage.

The rent will be what people are willing to pay.

Not directly they wouldn’t.
But, it would make it an attractive business again and bring many more investors who would bring more properties to the rental market. The high rents currently are being driven through lack of supply, if the supply increases it brings down rents through competition. It’s a win-win, I think even discounting 50% of the rent from tax consideration would have an effect. It would maintain a revenue stream for the government while alleviating tue market forces that are driving up rents.

There’s something wrong with a rental market where a landlord has little incentive to rent a property as a result of excessive taxation.

dubrov · 28-09-2018 8:07pm

Welcome to the world of income tax

28-09-2018 8:09pm

You don't know what rate of tax any given landlord is paying on rental income. Some could be paying nothing at all.

You are also assuming rents come from the government.
There are a few of us who pay rent without any assistance out of net pay.

Targeting tax breaks at landlords won't suddenly increase supply. It would probably only line their pockets.

Increasing supply through construction is a long term solution that stops giving rent to landlords, doesn't reduce tax collected and doesn't try to influence behaviour through money.

Rodin · 28-09-2018 8:13pm

Increasing the HAP payment also drives up rents and disadvantages low to middle income earners.

Put more money into renters pockets and the rent just goes up.

Twas easy access to credit drove up house prices.

mikemac2 · 28-09-2018 8:20pm

Charlie McCreevy cut VAT and then when it was found that consumers saw no benefit the old rate was put back

Hotels recieved a cut and prices have never been higher

Cutting tax on rental income may be a superb idea but I don’t foresee any large drop in rents. Landlords will keep the difference

3DataModem · 28-09-2018 8:29pm

The government pays a lot more private rent (HAP, etc) than it gets in tax on private rent.

BarryD2 · 28-09-2018 8:46pm

_Brian wrote: »

But, it would make it an attractive business again and bring many more investors who would bring more properties to the rental market.

Depends what you mean by 'investor'.

Why would you want to add incentives to encourage the 'buy to let' market? That just removes houses from the market that otherwise people in need of a home might buy and pushes prices up.

There is a need for rental properties but the provision of these should be run as full time businesses.

4ensic15 · 28-09-2018 8:48pm

When the Section 23 reliefs were in place apartments went up in great numbers. Increased supply drove down rents.

Victor · 28-09-2018 8:52pm

LotharIngum wrote: »

Nobody is at all p1ssed at the government for the sheer amount they take from the rent you pay to your landlord.
Over 50%.

If the government is getting that much, you must be earning an awful lot. Even if you took no capital allowances, and no pension or health insurance credits, you would have to be earning at least a million a year to pay 50% tax. May I interest you in the tiniest of violins?

http://services.deloitte.ie/tc/Results.aspxGross Nett Tax Effective tax rate
€10,000 €10,000 €- 0%
€30,000 €25,388 €4,612 15%
€100,000 €61,199 €38,801 39%
€300,000 €157,199 €142,801 48%
€1,000,000 €493,199 €506,801 51%
€3,000,000 €1,453,199 €1,546,801 52%

James Bond Junior wrote: »

I often think a lot of the housing crisis could be solved if tax on rental income was reduced to a flat rate in line with VAT. It gives the landlords more room to compete in times of over supply and an incentive for others to enter the rental market in times of under supply.

So, you want better off people with investments to pay less tax than less well off people trying to put food on the table?

dar100 · 28-09-2018 9:05pm

Amirani wrote: »

You could attempt to make this argument for any industry; prices would be halved if the Government eliminated income tax. It's a silly argument.

Its not a silly arguement at all. However, your analogies are

Should builders not have to pay income tax? If they didn't then they could be employed cheaper and therefore houses could be built cheaper. How about Doctors? Then healthcare would be cheaper.

He was talking about tax break at source on what can often be nearly one months salary for people. Doctors charge 50 euro, once a year for most healthy people. A roof over your head is a basic need; people are willing to give everything they have to keep theor children warm. Your analogy is disgusting

If you're earning income, you should pay tax on it. End of story.

I agree. However, depending on your business you may be exempt on certain taxes.

The solution to the rental issues is increasing supply. I don't think eliminating income tax on activity for a certain segment of the population is the way to do this.

Of course you do, its done for multi nationals on a much larger scale. Supply wont solve a dam thing regarding prices. We had far too many houses in boom and prices kept rising. To many vested interests for this to occur

Pkiernan · 28-09-2018 9:07pm

Victor wrote: »

If the government is getting that much, you must be earning an awful lot. Even if you took no capital allowances, and not pension or health insurance credits, you would have to be earning at least a million a year to pay 50% tax. May I interest you in the tiniest of violins?

http://services.deloitte.ie/tc/Results.aspxGross Nett Tax Effective tax rate
€10,000 €10,000 €- 0%
€30,000 €25,388 €4,612 15%
€100,000 €61,199 €38,801 39%
€300,000 €157,199 €142,801 48%
€1,000,000 €493,199 €506,801 51%
€3,000,000 €1,453,199 €1,546,801 52%

So, you want better off people with investments to pay less tax than less well off people trying to put food on the table?

Rental income attracts PRSI and USC too, and is not classified as pensionable.

Triple whammy blow.

JJayoo · 28-09-2018 9:30pm

Instead of lowering the tax they could use a certain amount specifically for social housing

Snipp · 28-09-2018 9:57pm

LotharIngum wrote: »

IT just struck me about all the anti landlord stuff going around.
Nobody is at all p1ssed at the government for the sheer amount they take from the rent you pay to your landlord.
Over 50%.
Imagine if the government were to forego that tax in return for the landlord reducing the rent.

But think about it folks. Over 50% of what you are paying is going to the government, so they are actually more to blame for your high rent thatn your landlord is.

If they really want to reduce rents, they should think about using a carrot approach and fessing up to how much they are contributing to high rent.

Stick approaches have failed miserably and always will.

Coming from a landlord, 50% does not go to the government. My Retention is around 50% however when you add in other fees and the letting agency get their share.

kurtainsider · 28-09-2018 10:22pm

artanevilla wrote: »

Do you think if taxes were lowed the rents would come down too?

It would just mean the LL gets more of a percentage.

The rent will be what people are willing to pay.

Why not turn this argument on its head then? Rent paid to those evil landlords should be tax deductible. That would halve rents in the morning. Brilliant!! I'll ring the minister.

What I'm really saying is that the revenue takes a huge chunk every time money moves in the state. The tenant gives half (in very broad terms) their income to the gov then pays the landlord the rent out of what's left. The landlord gives half (again in very broad terms) of the tenants rent to the gov in tax then pays the mortgage etc out of what's left.

The genius of this scenario here is that the government comes on the radio 3-4 times a day to lament the greed of the landlords for taking all the poor tenants money and no one (certainly not the right-on crowd at RTE) ask the why the Gov finishes up with 75% (minimum) of everyones rent and then point the mob in the direction of the landlord.

Please wake up!!!

Jet Black · 28-09-2018 10:58pm

They should temporally reduce tax paid by the landlord but rent paid has to be reduced accordingly. Like a house with a rent of €1600 at a rate of 40% reduced to €1200 at 15%. Tenant is better off by €400 a month. Landlord is better off by €60 a month, government take the hit. Sooner they sort it out the sooner they can put it back to the higher rate.

Quick example

James Bond Junior · 28-09-2018 11:00pm

To clarify on my point, relaxing tax on rental income may incentivise people into becoming landlords and thus the rental market cpuld increase and drive down rental prices due to increased supply. Basic economic principles. Look at the post Celtic Tiger years where supply was high and rents were extremely low yet taxes were still high. A mass exodus of landlords ensued meaning the rental market contracted and rental prices rocketed.

Jet Black · 28-09-2018 11:09pm

If you allowed landlords to evict non paying tenants supply would definitely increase. If tax was zero I'd still be reluctant to rent out my place because if I get a non paying tenant whos there for a year I'll be paying zero tax anyway.

kurtainsider · 28-09-2018 11:10pm

My take on the rental housing sector:

1. The gov won't build council houses - for reasons obvious to all.
2. They want the private sector to provide this accommodation.
3. They tax the landlord to the hilt on rental income- at personal rates rather than commercial.
4. They fall over themselves on the media to vilify greedy landlords.
5. They sit back confident that no one sees through the swindle.

I don't have an answer for the housing crisis other than that people who can, should get a job and be self reliant. But at least let's have a little honesty in the debate.

PS - I'm a huge supporter in the welfare state for people who through no fault of their own need state assistance and have no issue in paying my taxes to this end.

LotharIngum · 28-09-2018 11:11pm

Jet Black wrote: »

They should temporally reduce tax paid by the landlord but rent paid has to be reduced accordingly. Like a house with a rent of €1600 at a rate of 40% reduced to €1200 at 15%. Tenant is better off by €400 a month. Landlord is better off by €60 a month, government take the hit. Sooner they sort it out the sooner they can put it back to the higher rate.

Quick example

Well done that man.
Glad to see at least one person gets the idea.
The rest are exactly where Leo wants them, twisted and bitter and eager to jump down the evil ex landlords throat, instead of looking at the government.

Ronaldinho · 28-09-2018 11:13pm

LotharIngum wrote: »

Well done that man.
Glad to see at least one person gets the idea.
The rest are exactly where Leo wants them, twisted and bitter and eager to jump down the evil ex landlords throat, instead of looking at the government.

And how do you propose to fill the hole in Govt's tax take that your plan will result in?

kurtainsider · 28-09-2018 11:18pm

Ronaldinho wrote: »

And how do you propose to fill the hole in Govt's tax take that your plan will result in?

That's a different issue. Why don't you start a new thread? Maybe call it "Do people who bust their holes all their lives working pay enough tax?"

Geuze · 28-09-2018 11:18pm

Bear in mind that tax is not paid on the gross rent.

Tax is paid on the net rental profits, which is often way, way less than the gross rental income.

kurtainsider · 28-09-2018 11:25pm

Geuze wrote: »

Bear in mind that tax is not paid on the gross rent.

Tax is paid on the net rental profits, which is often way, way less than the gross rental income.

And very often it's way way not.
Would you consider educating yourself on this subject at all?

Geuze · 28-09-2018 11:39pm

With no debt and/or capital allowances, ok there won't be much deductions off the gross rent.

Jet Black · 28-09-2018 11:45pm

Ronaldinho wrote: »

And how do you propose to fill the hole in Govt's tax take that your plan will result in?

I think by more rentals coming on the market because the lower tax. I know it would have to be more than double whats there now with my tax change above and I think there would have to be more protection for tenants and landlords before even a fraction of that is available. The government need to take the hit until they sort this mess out. Once supply catches up and there's some incentive in the rental market they can switch it back to the old rate.

Quiet please · 28-09-2018 11:58pm

37% of Fine Gael tds ARE landlords.

Is nobody concerned at all about the amount that the government gets from their rent?

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