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

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    #62
    Sleeper12
    Registered Users Posts: 16,881 ✭✭✭✭Sleeper12


    Little Less Conversation wrote: »
    I'm paying very cheap rent where I am now and after doing the maths my landlord is only getting €500 a month for a four bedroomed house. That's nothing. I hope the government cops on and reduces their tax intake. There are decent landlords out there that aren't going to shaft their tenants either.


    You can't know what your landlord is getting after tax unless you know his mortgage & expenses.



    He does NOT pay over 50 percent on the rent you pay him. He pays 50 percent on the profit. This could be as low as 15 percent of the rent going on tax


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    #63
    Fol20
    Registered Users Posts: 3,623 ✭✭✭Fol20


    Sleeper12 wrote: »
    Many landlords will be happy for you to believe that the government tax all of your rent but this simply is not true. Your landlord only pay tax on the profit after expenses



    Here's an example given by a landlord on another thread:



    https://www.boards.ie/vbulletin/showthread.php?t=2057909222&page=16


    The example above shows that the tax take is actually around 33 percent. This can differ from one rental to another.



    The only was any landlord can pay 50 percent or higher in tax is if they own the property outright, don't insure it & spend zero on maintenance accountant, advertising, phone, stamps etc.



    I have never heard of a landlord paying over 50 percent of the rent in tax & I can't see how it can be possible when expenses are fully tax deductible.



    It's a myth. Don't believe this nonsense

    EDIT: I think I made a mistake in calculations there. Paying 250 in tax is actually less than 17 percent of the 1500 rent

    17 percent is nowhere near the 50 percent some would have you believe.

    It is taxed on 50pc of your income as per the example I provided. I don’t care about what I initially take in as I have a bunch of expenses that I have to pay out and will never see this money.They tax what is left over and in the example, your left with 500 minus taxes so it is 50pc

    Why are you targeting specific errivalant figures that don’t show the entire story. If you are a PAYE then you have your gross and that’s your income. You would then use the total figure of 1500. If it’s a business you need to subtract whatever it costs to run the business first before you get to the business owners “PAYE income” this it’s 500


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    #64
    Franz Von Peppercorn
    Closed Accounts Posts: 7,070 ✭✭✭Franz Von Peppercorn


    Grumpypants wrote: »
    The idea is to give a fair return to the landlord AND control rents. Rents now are being jacked up because 60% of it is lost to the tax man. If you simply reduce the tax it won't get passed on.

    But if you offer a massive reward to charge a fair rent and a massive punishment to over charge it fixes it.

    70% of landlords in Ireland have 1 property. That's a huge chunk of rent control that is fair to both parties and simple to implement.

    The idea is rational enough - it’s how the rent a room works. Might reduce revenue though.


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    #65
    Little Less Conversation
    Banned (with Prison Access) Posts: 189 ✭✭Little Less Conversation


    Sleeper12 wrote: »
    You can't know what your landlord is getting after tax unless you know his mortgage & expenses.



    He does NOT pay over 50 percent on the rent you pay him. He pays 50 percent on the profit. This could be as low as 15 percent of the rent going on tax

    Thanks for clearing that up.


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    #66
    Franz Von Peppercorn
    Closed Accounts Posts: 7,070 ✭✭✭Franz Von Peppercorn


    Fol20 wrote: »
    It is taxed on 50pc of your income as per the example I provided. I don’t care about what I initially take in as I have a bunch of expenses that I have to pay out and will never see this money.They tax what is left over and in the example, your left with 500 minus taxes so it is 50pc

    That’s tax on profit not income. Besides that there’s no specific 50% tax on landlords. In fact some landlords pay 0%, some pay 20% and some pay 50% marginal. Those that pay 50% marginal have other jobs.
    Why are you targeting specific errivalant figures that don’t show the entire story. If you are a PAYE then you have your gross and that’s your income. You would then use the total figure of 1500. If it’s a business you need to subtract whatever it costs to run the business first before you get to the business owners “PAYE income” this it’s 500

    But why don’t PAYE workers get to reduce mortgage interest for instance. That used to happen.


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    #67
    Sleeper12
    Registered Users Posts: 16,881 ✭✭✭✭Sleeper12


    Fol20 wrote:
    It is taxed on 50pc of your income as per the example I provided. I don’t care about what I initially take in as I have a bunch of expenses that I have to pay out and will never see this money.They tax what is left over and in the example, your left with 500 minus taxes so it is 50pc

    No. Totally untrue. You pat 50 percent of the profit & not 50 percent of the income of the property


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    #68
    Grumpypants
    Registered Users Posts: 7,751 ✭✭✭Grumpypants


    Sleeper12 wrote: »
    You can't know what your landlord is getting after tax unless you know his mortgage & expenses.



    He does NOT pay over 50 percent on the rent you pay him. He pays 50 percent on the profit. This could be as low as 15 percent of the rent going on tax

    I hate when people say you can write of expenses as if it is free money.


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    #69
    TheChizler
    Registered Users Posts: 9,405 ✭✭✭TheChizler


    Grumpypants wrote: »
    Rents now are being jacked up because 60% of it is lost to the tax man.

    A: that 60% figure is entirely incorrect, and B: Tax has more or less been unchanged for years yet rents have doubled in places. Quite simply rents have gone up because there are more people looking to rent than availability so people are willing to pay more.

    You won't make a dent in prices without restricting the price legally or increasing supply. Or maybe having a system where it's tax free up to a certain point but tax on the full amount over that as someone else suggested, but I have no idea what the unforseen effects of that would be.


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    #70
    GingerLily
    Registered Users Posts: 4,767 ✭✭✭GingerLily


    Grumpypants wrote: »
    And when he sells it he pays a huge tax bill on that again.

    Tax if the asset increases in value, and only on the increase? Or am I wrong?


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    #71
    twowheelsonly
    Registered Users Posts: 2,268 ✭✭✭twowheelsonly


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

    Significantly reduced HAP payments would help for a start.
    It's a vicious circle at the moment so something radical needs to be done.


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    #72
    TheChizler
    Registered Users Posts: 9,405 ✭✭✭TheChizler


    Grumpypants wrote: »
    I hate when people say you can write of expenses as if it is free money.

    My brother bought an iPhone X thinking he could just deduct it from his sole trader tax bill to Revenue, he had a nasty shock after talking to an accountant...


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    #73
    Franz Von Peppercorn
    Closed Accounts Posts: 7,070 ✭✭✭Franz Von Peppercorn


    Grumpypants wrote: »
    And when he sells it he pays a huge tax bill on that again.

    On the capital gains yes. Why wouldn’t he?


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    #74
    Fol20
    Registered Users Posts: 3,623 ✭✭✭Fol20


    Sleeper12 wrote: »
    No. Totally untrue. You pat 50 percent of the profit & not 50 percent of the income of the property

    I won’t start these symantecs again with you. A landlord and everyone only care about their bottom line and what they have in their pocket. When you do your taxes. They don’t tax the total 1500, they tax the 500. If they taxed the 1500 and they only took 250 off you. Then yes, it’s not 50pc tax but in reality they are only taxing the 500 as per my example.


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    #75
    Sleeper12
    Registered Users Posts: 16,881 ✭✭✭✭Sleeper12


    Grumpypants wrote:
    I hate when people say you can write of expenses as if it is free money.


    They are business expenses & you can right them off. That's it. You are investing in the upkeep of you business.

    OP needs to change the thread title as apart from it not being true but it's causing a lot of confusion.

    No landlord pays over 50 percent or the rent in tax.

    Landlords like all other businesses only pay tax on the profit and not the income


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    #76
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Skipped most of this to say welcome to ther forum OP if you've never heard anyone give out about income tax on rent! So I'm sorry if I'm repeating what has been said already.

    Tax reductions should not be given to LL's they should, in concert with caps, be given to tenants. Everybody wins. People didling the system will get only the worst of tenenants, tenants will get some much needed relief and the tax take stabilised by bringing people not paying into the system.


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    #77
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Ahem, they tax the income not the profit, it's called income tax. While it doesn't make a huge difference in common scenarios, it does there the LL has low expenses.


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    #78
    Grumpypants
    Registered Users Posts: 7,751 ✭✭✭Grumpypants


    Sleeper12 wrote: »
    They are business expenses & you can right them off. That's it. You are investing in the upkeep of you business.

    OP needs to change the thread title as apart from it not being true but it's causing a lot of confusion.

    No landlord pays over 50 percent or the rent in tax.

    Landlords like all other businesses only pay tax on the profit and not the income

    You spent that expense, that money is gone. The way you make it sound is landlords are writing off their tax bill and profiting. Spending 2k to reduce your tax bill by 400 is still a loss of 1600.


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    #79
    Senature
    Registered Users Posts: 339 ✭✭Senature


    A lot of people here don't seem to be able to tell the difference between Income/profit and cashflow. Tax rates have nothing to do with cashflow, landlords are taxed on profit, the same as any other business and self employed individual. Accidental landlords have my sympathy here. Anyone else has just made a investment that has turned sour/unsustainable. Not up to other taxpayers to bail you out via reduced income tax rates etc.


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    #80
    Sleeper12
    Registered Users Posts: 16,881 ✭✭✭✭Sleeper12


    Samuel T. Cogley wrote: »
    Ahem, they tax the income not the profit, it's called income tax. While it doesn't make a huge difference in common scenarios, it does there the LL has low expenses.


    I'm sorry but you are mistaking terms. In bold is not true



    The income of your property is the rent. You do NOT pay tax on this at this stage



    You have expenses, Mortgage interest, maintenance, insurance etc. These are deducted before you pay any tax.


    What you have left is called profit. You only pay tax on your profit & not the rent.



    Why several landlords on this thread continue to play semantics. I do believe it is to try confuse the truth.


    you will only ever pay tax on your profit in any business. Call the profit income if you want but it is NOT the income of the property or business. The income of the property is called rent. What you have left after expenses is profit (not income) and this is what is taxed.


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    #81
    Grumpypants
    Registered Users Posts: 7,751 ✭✭✭Grumpypants


    Sleeper12 wrote: »
    I'm sorry but you are mistaking terms. In bold is not true



    The income of your property is the rent. You do NOT pay tax on this at this stage



    You have expenses, Mortgage interest, maintenance, insurance etc. These are deducted before you pay any tax.


    What you have left is called profit. You only pay tax on your profit & not the rent.



    Why several landlords on this thread continue to play semantics. I do believe it is to try confuse the truth.


    you will only ever pay tax on your profit in any business. Call the profit income if you want but it is NOT the income of the property or business. The income of the property is called rent. What you have left after expenses is profit (not income) and this is what is taxed.

    You pay USC and PRSI on it all. You can't claim against those.

    You can expenses some items but only at the 20% rate, and you can't claim back the VAT in the same way a business can. So you pay 13.5 or 23% VAT on those costs, to save 20% income tax. That's why we don't count it in the same way a business can. Businesses can claim loads more when compared to landlords. It's not comparable.

    To say otherwise is being disingenuous.


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    #82
    Old diesel
    Registered Users Posts: 5,786 ✭✭✭Old diesel


    Franz Von Peppercorn wrote: »
    Why would reducing taxes on certain types of amateur landlords (with another job) reduce rental prices? Corporations can already pay just 12.5% so corporate landlords are already in that position.



    The problem is we are not building enough houses. The problem isn’t that there is a glut of houses to sell and still a problem with homelessness. In that case you might consider taxation policies that encourage landlordism.

    If there were more landlords in the present environment houses would be even harder to buy for first time buyers and there would still be a rental crisis.



    Ok, so no regulations at all then.

    People are becoming homeless directly as a result of landlords selling up.

    It then costs the state a LOT more then the tax take from a landlord to house the newly homeless family in a hotel or HUB.

    Re standards - I'm saying the government could support upgrades needed to a property to meet standards via grants etc.

    If the local authority inspector decides that a perfectly okay for many people property needs 20 k worth of work to meet HAP standards - then the state could pay the 20 k for the work to be done.

    Makes more sense to me then horsing the same amount into a hotel in about 4 months.


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    #83
    Corben Dallas
    Registered Users Posts: 1,582 ✭✭✭Corben Dallas


    Agree with OP 100%.

    Its a disgrace that the Government takes 50% of rent from private landlords.
    On a basic level its just another example of our highly geared government taxation policy ... nearly across the board.

    Meaning they sit down and plan to extract the maximum take (50% LOL) from rental income..... and then wonder why rents are so high. Same with petrol, Cigs, Wine any " Luxury Goods" etc.
    without considering they are taking money (spending power) out of Joe Public's pocket and the Irish economy.

    They would class Toilet Paper as a Luxury Good if they could get away with it.
    I'm not naive enough to think that if u reduced it to say even 30% they LL would pass it on to their tenants... ( it would be kept by LL) but if this is also paired with rent controls ( Rent agreement backed by the govn. which reduces rent by 18/20% over a fixed 3/5yr. term) u would actually see rents reduced and more property available by encouraging LL's back into the rental market.
    (maybe even from existing housing stock)

    Govn. takes way too much tax and then proceeds to waste your tax Euro in Government spending.


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    #84
    Senature
    Registered Users Posts: 339 ✭✭Senature


    Grumpypants wrote: »
    Sleeper12 wrote: »
    you will only ever pay tax on your profit in any business. Call the profit income if you want but it is NOT the income of the property or business. The income of the property is called rent. What you have left after expenses is profit (not income) and this is what is taxed.

    You pay USC and PRSI on it all. You can't claim against those.

    You can expenses some items but only at the 20% rate, and you can't claim back the VAT in the same way a business can. So you pay 13.5 or 23% VAT on those costs, to save 20% income tax. That's why we don't count it in the same way a business can. Businesses can claim loads more when compared to landlords. It's not comparable.

    To say otherwise is being disingenuous.
    Grumpypants, I think you are misinformed, or misunderstand VAT. Businesses who are registered for VAT can claim back VAT on expenses, but they also have to charge VAT on their sales, and pass this on to revenue. I'm pretty sure this avenue is open to landlords also. This would mean charging 23% on top of the rent, and then passing it on to the government, less any VAT paid on expenses. Doesn't sound as appealing now does it?


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    #85
    Sleeper12
    Registered Users Posts: 16,881 ✭✭✭✭Sleeper12


    Grumpypants wrote: »
    You pay USC and PRSI on it all. You can't claim against those.

    You can expenses some items but only at the 20% rate, and you can't claim back the VAT in the same way a business can. So you pay 13.5 or 23% VAT on those costs, to save 20% income tax. That's why we don't count it in the same way a business can. Businesses can claim loads more when compared to landlords. It's not comparable.

    To say otherwise is being disingenuous.




    We all understand that. Do you think you are unique?



    You can't claim the VAT back because you don't charge VAT. If you charged VAT rents would increase yet another 13.5 percent.



    Many small tradesmen aren't VAT registered as their turnover is too small. They can't claim back VAT either.



    Do you not realize that every self employed person in this country have to pay the same taxes. Every business owner pays the same taxes. USC and PRS. Everyone pays these.


    Here's the hard truth:
    Many, many small landlords don't understand their business. They don't understand that it is a long term investment. Eventually they own the property freehold. When did this get rich mentality crept into the business, I really don't know. It wasn't there 20 or 30 years ago.


    If you buy Google stocks for 500,000 euro & the dividend is 80K per year then that is your profit. The fact that you had to borrow the money for these shares doesn't mean that you didn't make 80K profit. The loan services the buying of the shares & after a period of years you wont owe any money on the shares.


    Too many landlords are getting confused. If you have to borrow to buy a house then it is a long term investment. Even if you don't make a penny for 20 years (you will though) its still a good investment as your tenants are in effect buying the property for you.



    You will notice landlords with several properties or landlords in the business 30 years or more don't comment here. Landlord with a lot of properties are happy with the way things are. There is more profit in renting now than at any point in the last 50 years.



    If small landlords continue to look at the short term view they will never be happy. Unless you pay cash then its a long term investment & it will only depress you looking at the profit & loss over a 12 month period.


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    #86
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    The tax is on INCOME, you then DEDUCT the expenses to allow for RELIEF. It's an INCOME tax the clue is in the name.


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    #87
    Senature
    Registered Users Posts: 339 ✭✭Senature


    It's very simple...

    Income minus allowable expenses = profit.

    Profit is what is taxed.


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    #88
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Senature wrote: »
    It's very simple...

    Income minus allowable expenses = profit.

    Profit is what is taxed.


    It's very simple..

    Income is taxed, deductions made which result in the net profit, which isn't taxed at all.

    Income is what's taxed under income tax.


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    #89
    Senature
    Registered Users Posts: 339 ✭✭Senature


    Samuel T. Cogley wrote: »
    It's very simple..

    Income is taxed, deductions made which result in the net profit, which isn't taxed at all.

    Income is what's taxed under income tax.
    Em, this makes no sense to me....


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    #90
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Sleeper12 wrote: »
    If small landlords continue to look at the short term view they will never be happy. Unless you pay cash then its a long term investment & it will only depress you looking at the profit & loss over a 12 month period.


    Tax aside there is where I agree with you, but the fact remians that unless a short term break even cash flow can be established, the vast majority of LL's (the ones that own two or less properties) will not remain in the sector and rents will continue to rise.


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    #91
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Senature wrote: »
    Em, this makes no sense to me....


    If you look at how the calcualtion is done you'll get it. It's not done the way you're suggesting.

    I did the two side by side in aonther thread the net result is within a few % of each other but they're not identical, furthermore one is the right way to do the claculation and the other, taxing the profit, is not. You start off by taking the tax against the gross and working from there, not deducting the expenses from the gross.


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