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depreciation of the building

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  • 29-10-2019 11:51am
    #1
    2lazytogetup
    Registered Users Posts: 828 ✭✭✭


    im working out costs of maintaining a house.

    Any idea how much i should budget per annum.

    For example, a new kitchen only lasts 10 years. cost of Roof, gutters, redecorating.

    Im thinking 6k per annum for a typical 4bed semi d.

    Is this about right.

    With mortgage 1500k at month, i think illl need at least 2k in rent to break even.

    Anyone worked out depreciation cost?


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    #2
    dennyk
    Registered Users Posts: 1,650 ✭✭✭dennyk


    > With mortgage 1500k at month, i think illl need at least 2k in rent to break even.

    Break even in cash flow, maybe, but don't forget that you may still be coming out ahead in terms of equity, as well as any capital appreciation.

    It's hard to specify an exact annual cost for maintaining a property, as a lot of it will depend on the specifics of the property itself (age, size, construction materials and quality, location, etc.). Do you already own a property that you plan to rent out, or are you looking at getting into a new buy-to-let/build-to-let deal?

    When considering your cash flow, don't forget to account for the tax you pay on your rental income. Of that €2k a month, you might only bring home €1k or less after taxes, if you have other sources of income that put you in the top income tax and USC brackets already. You can deduct certain expenses from your rental income before calculating tax, though. The biggest deduction is usually the mortgage interest deduction, but if you aren't paying much or any interest (e.g. you are many years into an existing mortgage loan so that most of your current payments are going towards the principal, or you don't have a mortgage at all), you may not get much of a deduction there. You cannot deduct your entire mortgage payment, only the portion which goes towards paying your mortgage interest.


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    #3
    Samuel T. Cogley
    Registered Users Posts: 10,684 ✭✭✭✭Samuel T. Cogley


    Pretty crappy kitchen if it only lasts ten years. You'll need more than 2K to break even in terms of cashflow.


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    #4
    pwurple
    Closed Accounts Posts: 12,449 ✭✭✭✭pwurple


    You're mixing up maintenance cost and depreciation. Two different concepts.

    It's really tricky to give a ballpark, because you are talking long term, building regs change during that time, and there are lot of variables. There is no "standard." Almost every house in the country is a one-off custom job.

    Think about what you have and give some gueses.
    -Current state, roof from the 80's or a recent one?
    -What is installed... heating tubes on the roof. Fires vs heat exchanger. Boiler type, oil or gas. Electrical spec.
    - Quality of finish. Is it a chipboard kitchen or solid wood. Lino on the floor or engineered timber. Triple glazed windows etc


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    #5
    riclad
    Registered Users Posts: 8,184 ✭✭✭riclad


    As a landlord you can claim the cost of repairs, as an expense,
    against rental income,
    depreciation is loss of value over time,
    say you buy a car for 20k,
    in 2 years time it may be worth only 12k, even its in perfect condition ,
    As a landlord you can claim for repairs ,
    over a period of 8 years .
    From the time you paid for the repair.
    it,s important to hold onto receipts .
    no point in paying cash for a cheap repair,
    pay a professional and get a reciept .
    its market value vs a new car is lower.
    House values depend on location, the economy , and factor,s ,
    like is it near a bus stop, luas.
    kitchens last more like 20 years .
    you can buy a new fridge, or oven, cost 800,euro.
    Claim 100 euro,s for the next 8 year s .
    An old house in bad condition in rathmines could be worth more than a new house in coolock.
    i read an article old victorian terrace ,3bed house, in very bad condition,
    for sale , 700k.
    Its in dublin 4 ,in last weeks sunday time s , Move property section.

    After a few years a landlord ,might choose to fit a new kitchen,
    if the kitchen fittings are old , a landlord might choose to fit a new kitchen,
    And claim it as an expense over the next 8 years .

    https://www.revenue.ie/en/property/home-renovation-incentive/hri-for-homeowners-and-landlords/index.aspx


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    #6
    Gumbo
    Moderators, Society & Culture Moderators Posts: 38,515 Mod ✭✭✭✭Gumbo


    riclad wrote: »
    As a landlord you can claim the cost of repairs, as an expense,
    against rental income,
    depreciation is loss of value over time,
    say you buy a car for 20k,
    in 2 years time it may be worth only 12k, even its in perfect condition ,
    As a landlord you can claim for repairs ,
    over a period of 8 years .
    From the time you paid for the repair.
    it,s important to hold onto receipts .
    no point in paying cash for a cheap repair,
    pay a professional and get a reciept .
    its market value vs a new car is lower.
    House values depend on location, the economy , and factor,s ,
    like is it near a bus stop, luas.
    kitchens last more like 20 years .
    you can buy a new fridge, or oven, cost 800,euro.
    Claim 100 euro,s for the next 8 year s .
    An old house in bad condition in rathmines could be worth more than a new house in coolock.
    i read an article old victorian terrace ,3bed house, in very bad condition,
    for sale , 700k.
    Its in dublin 4 ,in last weeks sunday time s , Move property section.

    After a few years a landlord ,might choose to fit a new kitchen,
    if the kitchen fittings are old , a landlord might choose to fit a new kitchen,
    And claim it as an expense over the next 8 years .

    https://www.revenue.ie/en/property/home-renovation-incentive/hri-for-homeowners-and-landlords/index.aspx

    I think you are getting mixed up....
    The link you posted is for the HRI (Home Renovation Initiative).

    Also, repairs can be claimed in full for the year in question. Its capital allowances that you claim 12.5% over 8 years.


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    #7
    [Deleted User]
    Posts: 17,728 ✭✭✭✭ [Deleted User]


    2lazytogetup wrote: »
    ............

    With mortgage 1500k at month, i think illl need at least 2k in rent to break even.

    Anyone worked out depreciation cost?

    You're able to deduct 100% of mortgage interest paid against the tax bill ........ so if half of the mortgage payment is interest then of the €2k income €1250 less other expenses is liable to income tax.


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    #8
    Gumbo
    Moderators, Society & Culture Moderators Posts: 38,515 Mod ✭✭✭✭Gumbo


    Augeo wrote: »
    You're able to deduct 100% of mortgage interest paid against the tax bill ........ so if half of the mortgage payment is interest then of the €2k income €1250 less other expenses is liable to income tax.

    Assuming you have a Social Claimant Tenant?


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    #9
    [Deleted User]
    Posts: 17,728 ✭✭✭✭ [Deleted User]


    kceire wrote: »
    Assuming you have a Social Claimant Tenant?

    I don't think so ......... not sure. It's a while since I've been a landlord. I think the scenario you mention was the case prior to 2019.

    Tax relief for landlords
    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.

    You must show that you have registered all tenancies in the property with the Residential Tenancies Board (RTB). Interest can only be deducted during the period in which the property is let.

    The amount of interest you can deduct on these mortgages has increased in recent years:

    Prior to 2017, it was 75% of the interest
    In 2017, it was 80% of the interest
    In 2018, it was 85% of the interest
    From January 2019, it will be 100% of the interest (as announced in Budget 2019)
    Interest is treated as accruing on a daily basis and the date the loan was taken out is not relevant.

    https://www.citizensinformation.ie/en/money_and_tax/tax/income_tax_credits_and_reliefs/housing_tax_credits_and_reliefs.html


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    #10
    Mic 1972
    Registered Users Posts: 3,213 ✭✭✭Mic 1972


    6k per year to maintain a house sounds expensive
    Kitchens and bathrooms are meant to last for a long time unless you plan to redecorate every few years

    I've been living in my house for 6 years now, i have only re-painted the outside once and had some plumming work due to previous cowboy jobs


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