Non Paying Tenant and Ensuring a Non Repeat

AhhHere · 21-11-2021 2:08pm #1

Hi There,

My cousin has a tenant that handed in their 90 days notice. They've stopped paying rent and are constantly being chased.

What are her chances of getting this rent back? She can keep the deposit but it's still 2 months missing + whatever costs required when clearing apartment for a new tenant.
Is there a list she can add this person's name to or search prospective tenants to make sure she does not fall into the same situation with a new tenant?

Thanks.

wildwillow · 21-11-2021 2:14pm

Consider herself lucky the tenant is leaving owing just three month's rent. Keep deposit and try for remaining rent but it's unlikely it will be paid.

Not giving a reference is about the only thing one can do to help a future landlord.

Most landlords are decent people but the tenent now has too many rights which are not balanced by responsibilities.

DubCount · 21-11-2021 5:06pm

Chances of getting missing rent paid - minimal. It would probably cost more to chase the payment than the value of how much is involved. Thats assuming you can trace the tenant after they leave etc.

There is no list you can add the tenants name to. Any such list would probably breach GDPR, risk an action for defamation etc.

Honestly, being left down 2 months rent is not a bad result these days.

amacca · 21-11-2021 8:33pm

And people wonder why rent is so expensive

Yes of course it's not the only factor but if I have to cover the loss of months worth of rent on a property as a matter of course then the rate and the deposit are going up

It's also wrong that there isn't feasible recourse to go after non-paying tenants

mrslancaster · 22-11-2021 8:08pm

https://www.boards.ie/discussion/comment/118202902#Comment_118202902

You can only ask one month's rent deposit but I have heard about some tenants having to pay a cleaning warranty, LPT, parking fee, garden maintenance fee, pet fees, admin fees, landlord insurance, apartment block management fees and some other things outside of core rent deposits. It appears that landlords are starting to charge for anything they provide over the required regulations but it could be isolated cases and not accross the board.

Rent is restricted in a RPZ and can't be raised over the allowable amount. You could lodge a dispute with RTB for unpaid rent.

Dav010 · 22-11-2021 8:26pm

Op, new legislation introduced in July to deal with just such a problem. Ask your cousin to act on it without delay.

https://www.rtb.ie/emergency-measures-ended-new-protections-introduced-for-the-rental-sector/dealing-with-rent-arrears-after-the-emergency-period

Gmaximum · 22-11-2021 9:31pm

Having been in this situation before i still attended a RTB hearing to get an award in my favour. The tenant had left and I was down 4 months rent. Never got the money but at least if someone ever goes to search for the tenant on the judgments section of the RTB site they may find the name and be warned.

I do this with every letting, I accept that it’s futile particularly with a common name but you never know…. You can ask for a full rental history after and yes they could lie

AhhHere · 23-11-2021 10:47am

https://www.boards.ie/discussion/comment/118208008#Comment_118208008

That's very interesting. Good to know! Thanks

[Deleted User] · 23-11-2021 11:01am

"JUST" getting clipped for 2 months is a serious result.....count lucky stars & move on....... now that sounds v downbeat/ defeatist but that's the way it is in today's rental market.......... landlords are the 'fallguy' for non paying tenants........... I, luckily, have great tenants ....... place kept clean& rent when due etc....... they're working towards a mortgage in next year/2........... as soon as they're movingnout/ the 'for sale' sign is going up.

[Deleted User] · 23-11-2021 11:08am

The tenant hasn’t left yet have they? I really hope they do leave within the 90 days as per their word. But they also gave their word that they’d pay rent…..

Fingers crossed for your friend.

CiboC · 23-11-2021 11:13am

And to add insult to injury, Revenue will consider the missed rent as income anyway, and charge tax even if you never actually get it....

[Deleted User] · 23-11-2021 11:18am

https://www.boards.ie/discussion/comment/118209775#Comment_118209775

No they don’t. You provide details of actual income for the year on the tax return and if you’ve overpaid tax, they’ll refund it.

Ray Palmer · 23-11-2021 12:01pm

https://www.boards.ie/discussion/comment/118209775#Comment_118209775

no they won't. You produce what income you actually got and are taxed on that and not hypothetical income you never received. Never understand why people say otherwise and how they think it is possible.

Claw Hammer · 23-11-2021 1:05pm

The way to deal with non paying tenants is to insist on a guarantor, whom you can sue in the courts. Letting a tenant in without a guarantee is foolish. Disputes with the tenant go to the RTB, disputes with the guarantor go to court.

spaceHopper · 23-11-2021 1:14pm

Could they tell them the 90 says isn't necessary and they can move whenever they want.

They should serve them with notice of arrears. Did they get references before they moved in. Could they inform the tenant that each of there references will be written to informing them that they left owing rent. Nothing will happen but next time they ask for a bank reference they could be told no.

File a case with the RTB.

Make sure to check that all the bill are uptodate and they have left a forwarding address. Keep all their post so that they have to collect it.

Honestly get them out as soon as possible.

CiboC · 23-11-2021 4:26pm

https://www.boards.ie/discussion/comment/118209803#Comment_118209803

Rental income falls under Schedule D, case V.

Irrespective of what other income you have and how you pay tax on it, the basis of assessment for rental income is income earned, not income received - income is considered earned when it becomes receivable, not when it is actually paid.

[Deleted User] · 23-11-2021 4:43pm

That I didn’t know. I would only ever put what I had received on the tax return. Granted, if I was owed anything at the end of the tax year, I would have received it by the time I submitted the return but my return for 2021 will be different as the tenancy has ceased and some rent was owed to me. I’m sticking down what I received.

jimmyendless · 23-11-2021 4:52pm

https://www.boards.ie/discussion/comment/118200965#Comment_118200965

Haha, most tenants are good people. Not valid generalising in this way anyway.

My aunt is a ~~slumlord~~ landlord and i've unfortunately rented for over 10 years (not from her) and

this makes me conclude that the biggest B@$tard always wins, be it tenant or landlord.

Ray Palmer · 23-11-2021 5:47pm

https://www.boards.ie/discussion/comment/118211501#Comment_118211501

I think you are misreading that and I doubt any case has ever been brought against a landlord for not paying taxes on payment not received. It is all about payment and the purpose is to prevent the "rent pooling". It would be absolutely absurd to tax anybody for income they never made and wouldn't allow bad debt write off. I'll ask my accountant for a laugh but I don't believe you and read the details on revenue and this doesn't even seem to be vaguely what it says. It does mention paying tax on insurance from non-paying rent which would mean double taxation using your logic.

https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-04/04-08-01.pdf

CiboC · 23-11-2021 6:34pm

It's not a question of misreading it, those are the actual rules. I didn't write them, I just know what they are!

And unfortunately I know of at least two people who were made pay tax on rent they never received.

The link you posted doesn't really refer to this issue at all. Look here:

https://www.revenue.ie/en/property/rental-income/irish-rental-income/index.aspx

You will see that there is a reference to requesting to have taxable income adjusted if you can prove you could not recover rent, which backs up exactly what I said - you have to declare it irrespective of whether you have actually received it, and then try to get it adjusted after the fact.

Clipcloppp · 23-11-2021 6:50pm

I was in a similar situation where I wasn't paid the correct rent. I served the tenant with a rent arrears notification which they were supposed to pay within 28 days. He didn't. I followed up with a notice of termination due to rent arrears. The tenant lodged his own breach, which worked in my favour as we were listened to quicker because of this. He left, and i got my house back, but no rent arrears. A group called The IPOA were very helpful. The cost is 150 euros for membership for the year. They are well versed on the legal side of it and also looked over my file. Act now rather than wait. Their name can be also put into the RTB portal as having had a dispute. This hopefully in time will become easier to use.

JimmyVik · 24-11-2021 9:09am

https://www.boards.ie/discussion/comment/118210389#Comment_118210389

Can you really do that when renting?

If so why doesnt every landlord ask for that now before giving a property over? Seems like a good way to protect themselves from bad tenants.

Ray Palmer · 24-11-2021 9:22am

https://www.boards.ie/discussion/comment/118212170#Comment_118212170

I have read both pieces and they do not in anyway match what you are saying. It mentions income and payment. No income from non payment.

If you know of cases then you should be able to point to the cases and their outcome. Can you point to where it actually says income is derived from how much you could have got renting it out as opposed to what you actually get? The section on file tax returns makes it is clear you base it on actual income. It really seems like you are making a claims and have no proof of them. I don't know how you are reading the information and see it saying you pay income tax on non paid rent. You will have to spell it out

DubCount · 24-11-2021 10:04am

https://www.boards.ie/discussion/comment/118214375#Comment_118214375

Sadly, I believe CyboB is correct on this one.

The "cases" referred to are not cases that have come before the courts. There are schedules under that tax code for how different types of income should be taxed, and some of these schedules are sub divided into "cases". The categorisation of rental income from a residential property is Schedule D, Case V. Under the rules for assessing income under Schedule D Case v, profits or losses are calculated on an "arising basis" rather than a "cash basis". The "arising basis" means you get taxed on the income that should have arisen in the taxable period. The principle is that if you can sue for the money down the road, the income is deemed to have already arisen, and you have to pay tax on it. Its only when you can establish that the money due is not recoverable, that you can get a write off for tax purposes. Before that, the income is deemed to have arisen, and you pay tax on it.

As an extra kick from Mr. Revenue, after paying tax on income you never actually received, when you finally get to recognise the loss from your non-paying tenant, that loss can only be used against other Schedule D Case V profits. So if you are a single property LL who gets stung and leaves the market, the loss you've made can only be used against other rental income, and you'll never get the benefit for it.

If there is a way to kick a LL, our politicians have already though of it.

Ray Palmer · 24-11-2021 10:15am

https://www.boards.ie/discussion/comment/118214486#Comment_118214486

I don't see the legislation mention anything other than "payment" and see no mention of "arising". If somebody has been given a judgment to pay money there would be a record of such. If it is that messed up and revenue are pursuing people there would be evidence. The suggestion would also be that while a place is vacant you would be paying tax on it while it was empty

CiboC · 24-11-2021 11:24am

https://www.boards.ie/discussion/comment/118214522#Comment_118214522

You are equating 'income' with 'receipt' but they are not the same thing. It's a similar concept to something being sold on credit on 31/12/21 - it would be considered a sale in 2021 and would be taxable as such, even though the actual payment won't arrive until sometime in 2022.

You may not like it, you may think it is unfair (and I agree with you, the way private landlords are treated here is terrible), but that is the law.

If your property is vacant there is nobody who is due to pay you rent and so there is no income to be taxed....

DubCount · 24-11-2021 11:24am

https://www.boards.ie/discussion/comment/118214522#Comment_118214522

Section 81 of the Income Tax Act 1967.

Subsection 3. ..... "the amount of the profits or gains to be charged under this section shall be arrived at by making from any rent to which the lessor becomes entitled in the year of assessment" ......

The important part is "becomes entitled" - that is, when the money is owed, not when its paid. You become entitled to the money when you can take the tenant to court to sue them for the money they owe.

Dont shoot the messenger. Income tax in Ireland is on a self assessment basis. If you get a Revenue audit, they will apply the law. If you ask your accountant, they will confirm the law for you. I didnt write it, and I dont agree with it, but those are the rules.

Ray Palmer · 24-11-2021 11:31am

https://www.boards.ie/discussion/comment/118214855#Comment_118214855

Don't get me wrong I just wanted the basis people were making the claim and if people have actually been made pay it. It seems unlikely in the real world that you would be actually made pay it and it only really would happen under an audit situation. Laws and how they are applied are different things.

Non Paying Tenant and Ensuring a Non Repeat

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