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Roughly how much would be earned from a monthly rent of €2,200 ?

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  • 29-07-2020 5:06pm
    #1
    St1mpMeister
    Registered Users Posts: 496 ✭✭


    As per the title, assuming my property could be rented for €2,200 roughly what is average take home after all taxes/costs have been accounted for?

    Assume for the sake of argument that I have good tenants that pay on time and the only costs would be typical wear and tear.


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    #2
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,618 Mod ✭✭✭✭L1011


    Is the property mortgaged or held outright?


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    #3
    Thierry12
    Closed Accounts Posts: 979 ✭✭✭Thierry12


    L1011 wrote: »
    Is the property mortgaged or held outright?

    Interesting question

    If someone is doing a calculation, could mine be done too :pac: ?

    1200 rent pm ( no mortgage, house owned outright )

    Combined married couple salary of €60,000 per year


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    #4
    St1mpMeister
    Registered Users Posts: 496 ✭✭St1mpMeister


    L1011 wrote: »
    Is the property mortgaged or held outright?

    Not sure why that would matter, does it affect the tax level or something similar?

    For reference I would be on the higher tax rate.


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    #5
    Pkiernan
    Registered Users Posts: 4,315 ✭✭✭Pkiernan


    St1mpMeister wrote: »
    As per the title, assuming my property could be rented for €2,200 roughly what is average take home after all taxes/costs have been accounted for?

    Assume for the sake of argument that I have good tenants that pay on time and the only costs would be typical wear and tear.

    If you're already paying the marginal rate, then assume 53% tax on the income.

    You can deduct mortgage interest if any, repairs, insurance and management company fees if applicable.


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    #6
    thomas 123
    Registered Users Posts: 2,506 ✭✭✭thomas 123


    St1mpMeister wrote: »
    Not sure why that would matter, does it affect the tax level or something similar?

    You would need to subtract the mortgage cost off the rent price.

    Owned = more profit.


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    #7
    St1mpMeister
    Registered Users Posts: 496 ✭✭St1mpMeister


    thomas 123 wrote: »
    You would need to subtract the mortgage cost off the rent price.

    Owned = more profit.

    No I wasn't talking about profit.. I was just talking about net income from the property alone, not factoring in my own private expenditure.


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    #8
    Thierry12
    Closed Accounts Posts: 979 ✭✭✭Thierry12


    St1mpMeister wrote: »
    Not sure why that would matter, does it affect the tax level or something similar?

    You can deduct the interest on mortgages used to purchase, improve or repair rented residential property when working out your rental income for tax purposes.


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    #9
    St1mpMeister
    Registered Users Posts: 496 ✭✭St1mpMeister


    ok so as a VERY ROUGH approximation.

    €2,200 rent would get €1,034 after tax assuming no mortgage or repairs.


    I'm currently looking at getting a 2nd property that would have roughly €500/month mortgage, so it's good to know I'll be able to pay it off using the rent from the first place.


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    #10
    Lizardlegz
    Registered Users Posts: 267 ✭✭Lizardlegz


    Does that rate of tax change if you rent your property while your out of the country and have an overseas bank account?


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    #11
    redarmyblues
    Registered Users Posts: 972 ✭✭✭redarmyblues


    Lizardlegz wrote: »
    Does that rate of tax change if you rent your property while your out of the country and have an overseas bank account?

    That depends where you are tax resident.

    OP this is not a good time to get into the private rental market.


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    #12
    circular flexing
    Registered Users Posts: 2,584 ✭✭✭circular flexing


    Lizardlegz wrote: »
    Does that rate of tax change if you rent your property while your out of the country and have an overseas bank account?


    Yes, you generally don't get the full tax credit, you can get a small tax credit based on the percentage of income earned from the rent vs. your total worldwide income. If you are resident of a country that has a tax treaty with Ireland then you can offset the tax paid in Ireland against the tax paid in the country where you are resident.


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    #13
    Grumpypants
    Registered Users Posts: 7,749 ✭✭✭Grumpypants


    Put aside about 2k for insurance, costs and upkeep etc. Some years it will be less, other years a boiler might go and it will be more. So average about 2k.

    Then add up all the rest and half it for tax, and you are in the ball park of 12k.

    It's not the most accurate but a good finger in the wind estimate.


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    #14
    triggermortis
    Registered Users Posts: 2,683 ✭✭✭triggermortis


    If the property is mortgaged then you'll need to notify the mortgage lender as your tax allowance on the mortgage will change if it is no longer your main residence. We recently sold our house and got hit with an unexpected bill as we didn't do this at the time of renting it out. We were out of the country for part of the rental time and so the income wasn't as badly taxed as when we came home, but the tax bill for what I mentioned earlier was unwelcome news.
    Glad to be out of the rental market now though.


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    #15
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    triggermortis wrote: »
    If the property is mortgaged then you'll need to notify the mortgage lender as your tax allowance on the mortgage will change if it is no longer your main residence. We recently sold our house and got hit with an unexpected bill as we didn't do this at the time of renting it out. We were out of the country for part of the rental time and so the income wasn't as badly taxed as when we came home, but the tax bill for what I mentioned earlier was unwelcome news.
    Glad to be out of the rental market now though.

    Not only will your tax allowance change if in receipt of TRS, but in most cases you'd have to convert to a Buy to Let mortgage with the attached exorbitant interest rate.


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    #16
    Sheep Shagger
    Moderators, Business & Finance Moderators Posts: 6,216 Mod ✭✭✭✭Sheep Shagger


    Samuel T. Cogley wrote: »
    Not only will your tax allowance change if in receipt of TRS, but in most cases you'd have to convert to a Buy to Let mortgage with the attached exorbitant interest rate.

    Not always, depends on if its stipulated as owner occupier in the fine print - we are on a tracker and the bank advised no change when we started renting the place out.

    IF you do have to change to a higher interest rate, that's more to write off as an expense.


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    #17
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Sheep Shagger wrote: »
    Not always, depends on if its stipulated as owner occupier in the fine print - we are on a tracker and the bank advised no change when we started renting the place out.

    Hence the use of 'in most cases'. :pac:


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    #18
    Sheep Shagger
    Moderators, Business & Finance Moderators Posts: 6,216 Mod ✭✭✭✭Sheep Shagger


    thomas 123 wrote: »
    You would need to subtract the mortgage cost off the rent price.

    Owned = more profit.

    You can write off the interesf cost (not the full mortgage amount you pay the bank each month). The bank provides you a breakdown of principal and interest paid each calendar year.


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    #19
    St1mpMeister
    Registered Users Posts: 496 ✭✭St1mpMeister


    redarmyblues wrote: »
    OP this is not a good time to get into the private rental market.

    Why is that?

    As I mentioned I'd be satisfied ending up with circa €500 per month for the €2,200 rent after factoring the other costs.


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    #20
    accensi0n
    Registered Users Posts: 2,738 ✭✭✭accensi0n


    St1mpMeister wrote: »
    Why is that?

    As I mentioned I'd be satisfied ending up with circa €500 per month for the €2,200 rent after factoring the other costs.

    you might end up getting €0 per month.


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    #21
    0gac3yjefb5sv7
    Closed Accounts Posts: 3,948 ✭✭✭0gac3yjefb5sv7


    Has anyone on boards.ie ever said it's a good time to get into the rental market? Go for it if it works for you OP. You would think owning a second property is worse than hell according to most on here.


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    #22
    Cuddlesworth
    Registered Users Posts: 13,980 ✭✭✭✭Cuddlesworth


    St1mpMeister wrote: »
    Why is that?

    As I mentioned I'd be satisfied ending up with circa €500 per month for the €2,200 rent after factoring the other costs.

    Because there is risk in the investment and time invested managing the tenant or property.

    Your assuming 100% occupancy rates.
    Your assuming your time investment will be minimal or hands off.
    You could get stung for very high repair costs in the property itself, naturally.
    You could get the atypical bad tenant, loose 1 to 2 years of rent and be faced with significant repair bills.
    Market forces could devalue the property.


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    #23
    Cuddlesworth
    Registered Users Posts: 13,980 ✭✭✭✭Cuddlesworth


    MattS1 wrote: »
    Has anyone on boards.ie ever said it's a good time to get into the rental market?

    I don't think so. But this board gets to see the bad side of the market clearer then most.

    But we are currently in a situation where the established industry is leaving in droves. For new investors, it would be worth their while considering why that is currently happening before investing significant sums of their money.

    Simply put, if its such a good investment, why are investors leaving in droves?


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    #24
    0gac3yjefb5sv7
    Closed Accounts Posts: 3,948 ✭✭✭0gac3yjefb5sv7


    Cuddlesworth wrote: »
    I don't think so. But this board gets to see the bad side of the market clearer then most.

    But we are currently in a situation where the established industry is leaving in droves. For new investors, it would be worth their while considering why that is currently happening before investing significant sums of their money.

    Simply put, if its such a good investment, why are investors leaving in droves?

    Was there ever a time when they had entered it? Not according to people on here. There is bad tenants but its completely overblown here. There can be good tenants as well that stay for 5-10 years with very little issues. It may be better investing money elsewhere of course, like any investment but no guarantee in that either (unless a savings account with very low interest rates).


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    #25
    St1mpMeister
    Registered Users Posts: 496 ✭✭St1mpMeister


    Cuddlesworth wrote: »
    Because there is risk in the investment and time invested managing the tenant or property.

    Your assuming 100% occupancy rates.
    Your assuming your time investment will be minimal or hands off.
    You could get stung for very high repair costs in the property itself, naturally.
    You could get the atypical bad tenant, loose 1 to 2 years of rent and be faced with significant repair bills.
    Market forces could devalue the property.

    Would outsourcing this to an agency to manage offset some of these issues?

    I'd probably want to meet the tenants to vet them before they moved in, but after that I could give it to an agency to manage.

    The property is in a high demand area so I suspect no issues getting it rented.


    Also just to be clear, the €500 per month is something I could pay myself without relying on the rent, so downtime between tenants is fine or having some periods where I end up with nothing due to repairs etc, but it's just a nice additional income for the times when it does work out.


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    #26
    Bandana boy
    Registered Users Posts: 4,325 ✭✭✭Bandana boy


    using my own rental as a budget template

    Expenses ~1000 a year
    this is replacing white goods every 4 or so years painting and carpets every 3 years and repairs.
    If your renting fully furnished you could increase this to ~1500
    Dead time between tenants subtract 1 months rent per year
    if your using a letting company to manage the property subtract 1 more month each year
    Gardening costs ?

    Insurance ~600 a year
    Accountant for tax return ~200 a year
    property tax ~300

    So Income for tax purposes 2200*11 = 24,200
    Expenses ~4300
    =19900
    tax bill -10,547

    Income 9353 after tax

    if you have a mortgage you can subtract the cost of interest as an expense but not the mortgage payment
    So with a mortgage payment of 6,000 a year you would earn a little over 3k a year while also gradually buying an appreciating asset


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    #27
    St1mpMeister
    Registered Users Posts: 496 ✭✭St1mpMeister


    Grand thanks, the expenses would be higher than I'd estimate for my place though since it's a largely low-maintenance place.


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    #28
    py
    Registered Users Posts: 1,527 ✭✭✭py


    Just a note on the interest from your mortgage, it can only be deducted if the tenancy is registered with RTB.

    Good information here.


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    #29
    Thierry12
    Closed Accounts Posts: 979 ✭✭✭Thierry12


    MattS1 wrote: »
    Has anyone on boards.ie ever said it's a good time to get into the rental market? Go for it if it works for you OP. You would think owning a second property is worse than hell according to most on here.

    Never a good time to buy a house, car, graphics card, you name it :pac:

    Most risk aversed place around


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    #30
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    MattS1 wrote: »
    Has anyone on boards.ie ever said it's a good time to get into the rental market? Go for it if it works for you OP. You would think owning a second property is worse than hell according to most on here.

    There have been brilliant times to get into the market and there will be again. Cash buyer at the depths of a recession especially if there is a break on CAT is one of them.

    In a property bubble when evictions have been banned is not a good time to become a LL. The legislative backdrop has been getting worse for years hence why people advise prudence.

    While worse than hell might be an exaggeration, it's a constant worry - even with good tenants and very stressful if you get someone who doesn't pay the rent and is probably trashing the place. Delinquent tenants exist in all segments of the market.

    I'm open to correction on the legal costs but a full blown eviction taking 18 months is what €10K? Damage can be anyone's guess. Zero chance of recovery from the tenant. Fine if you've the cash flow and contingency fund but many people go into this with neither.


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    #31
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Thierry12 wrote: »
    Never a good time to buy a house, car, graphics card, you name it :pac:

    Most risk aversed place around

    With two potentially revolutionary new architectures being launched in a matter of weeks you'd be wise to hold off getting a new GPU. I would have thought now would have been an ideal time to buy a car.


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