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15-01-2020, 16:11   #106
$hifty
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Originally Posted by Fol20 View Post
Hey shifty. You need to deduct current expenses and capital allowances before you pay tax. Disregarding usc for this to make it simplistic.
Yep, I allowed for 160 per month which translates to about €2,000 per year and is factored in to my rough calculations. Even if you doubled that, it's still a €6,800 yearly bill or 204,000 over the lifetime of the mortgage.
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15-01-2020, 17:22   #107
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Small but vital correction above.



In response to the above bolded part.

A €1,600 p/m rental income leaves an annual tax bill of about €8,600 without any expenses. If the expenses came to about €160 per month (generous) that still leaves an annual tax bill of €7,600 roughly, or close to €230,000 in tax over 30 years. Hardly free. This figure will go up, obviously, over the life of the mortgage as the interest deductible goes down and the rent increases along with inflation.

This obviously doesn't include the mortgage payments. So, if we imagine the rent doesn't change over the term of the mortgage for simplicity sake:

Mortage payments (300k @ 4.5% over 30 years: 547,000
Tax paid: 230,000
Total: 777,000
Less rent received: 576,000

Net: €201,000 paid over 30 years (€560 p/m)

Simplistic figures, open to correction, but you get the gist. That's before you factor in time and effort and stress etc. It ain't free, by a long shot.
1600 per month equals 19200 per annum - how much mortgage interest have you offset to determine tax amount?
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15-01-2020, 19:15   #108
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Originally Posted by $hifty View Post
Small but vital correction above.



In response to the above bolded part.

A €1,600 p/m rental income leaves an annual tax bill of about €8,600 without any expenses. If the expenses came to about €160 per month (generous) that still leaves an annual tax bill of €7,600 roughly, or close to €230,000 in tax over 30 years. Hardly free. This figure will go up, obviously, over the life of the mortgage as the interest deductible goes down and the rent increases along with inflation.

This obviously doesn't include the mortgage payments. So, if we imagine the rent doesn't change over the term of the mortgage for simplicity sake:

Mortage payments (300k @ 4.5% over 30 years: 547,000
Tax paid: 230,000
Total: 777,000
Less rent received: 576,000

Net: €201,000 paid over 30 years (€560 p/m)

Simplistic figures, open to correction, but you get the gist. That's before you factor in time and effort and stress etc. It ain't free, by a long shot.

Your post proves my point correctly. You should not be in this business as an amateur landlord. That is purely advice for your own protection.

You don't appear to understand the difference between nominal and real (I'm not even going to ask you to justify the discount factor you're applying here on the "income" side of your "analysis").
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15-01-2020, 19:55   #109
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As you have gathered OP, the problem is with the supply of housing/rentals - in other words: Not enough houses/rentals are being built.

The no.1 problem there, is that there is an ideological objection (due to free market fetishism) to government building houses - and the government is entirely financially capable of doing this, and is capable of single-handedly solving the crisis.
The Irish construction sector is pretty much at capacity right now. Doesn’t matter if it’s private or public - there won’t be more houses.
Since 2007 real inflation adjusted salaries in eastern europe have more than doubled and unemployment rates are below 4%. No one is coming here to work as a full time employee. There a plenty of cash-in-hand folk still working here for refurbishment jobs, but professional builders and the state can’t hire on these conditions.

Making workers hand over half their cash (tax) so the government can provide an easy life (dole, A rated new house) to those who never work is simply never going to work. Nurse emigration is kind of the same thing.
Crazy that there’s a builder/trades shortage in a country with a real unemployment rate of almost 10% (Live Register rate + Live Register Activation Programmes).
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15-01-2020, 20:21   #110
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Reason for the high prices:
Supply and demand. There are insufficient residential units for the amount of people looking.
There are supply problems in particular: the construction and banking industries were destroyed in the bubble. They still do not have the capacity (construction workers and cheap capital) they had back then.
You'll note that even now only now are planning permission outputs being cranked up to the levels seen in 2009:
https://www.cso.ie/en/releasesandpub...squarter12019/

Costs of financing and construction (due to tighter regulation) are now higher making things more difficult.

On the demand side, Ireland's economy has been growing massively and quickly with much of that activity happening in Dublin creating loads of jobs.
Supply usually takes a few years to catch up with demand (knowing that stuff needs to get built, then building it, selling it and renting it) - and supply in Ireland has been particularly slow given the fact it was destroyed.
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15-01-2020, 21:07   #111
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The building industry crashed in 2008, many workers left ireland.since the boom our population has increased , we would need to build 10k housing units, every year to meet demand
We simply do not have enough rental units to meet demand.
Young people go to college or work in citys , they do not want to live in small
rural towns miles away from where they work
from the sunday times, last week, builders have applied to build 5000 new apartments ,average price 300k plus to be built in 2020
Many of these apartments will be rented out.We have loads of jobs in dublin,
they supply of rental units has not kept up with demand .
after 2008 many irish building companys went out of business ,
as the house,s they built overnight lost 50-60 per cent of their value.
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15-01-2020, 22:01   #112
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A proper, possible to enforce, vacant site levy needs to be implemented and actually enforced properly. It would need to increase over time sufficiently to discourage hoarding of land banks in currently needed locations.'

I know that there is one currently in practice, but I think that it is not applied very often.
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15-01-2020, 22:28   #113
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So say you're a landlord, and you own a 2 bed apartment with a mortgage of €900 a month, of which €350 is interest.

You rent out the apartment for €1500 a month. If your rental income is all taxed at 40%, but you can deduct the interest paid on the mortgage from the taxes owed, you pay Revenue €250 a month? (600-350). So you're still making a profit of €350 more per month than the cost of the mortgage?

I'm sure I've gotten this wrong, just trying to understand. I'm also aware that being a landlord can be a complete nightmare for the reasons listed in the thread, namely being unable to evict demon tenants, and I'm ignoring all the other costs associated with owning an apartment for now- ie property tax, maintenance fees etc.
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15-01-2020, 22:30   #114
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Also I see in the UK they have a separate tax credits system for landlords, in addition to the one they'd have in their day jobs. So you pay no tax on the first £11,500 of rental income, but they don't have tax relief for mortgage interest. Still seems like it would work out better to be a landlord there... Yes I'm sure you're all saying "duh"-
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15-01-2020, 22:37   #115
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Originally Posted by Shelga View Post
So say you're a landlord, and you own a 2 bed apartment with a mortgage of €900 a month, of which €350 is interest.

You rent out the apartment for €1500 a month. If your rental income is all taxed at 40%, but you can deduct the interest paid on the mortgage from the taxes owed, you pay Revenue €250 a month? (600-350). So you're still making a profit of €350 more per month than the cost of the mortgage?

I'm sure I've gotten this wrong, just trying to understand. I'm also aware that being a landlord can be a complete nightmare for the reasons listed in the thread, namely being unable to evict demon tenants, and I'm ignoring all the other costs associated with owning an apartment for now- ie property tax, maintenance fees etc.
It would be 40% + USC 7% + PRSI 4% = 51% * (1500 rental income - 350 mortgage interest).
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15-01-2020, 22:47   #116
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Also I see in the UK they have a separate tax credits system for landlords, in addition to the one they'd have in their day jobs. So you pay no tax on the first £11,500 of rental income, but they don't have tax relief for mortgage interest. Still seems like it would work out better to be a landlord there... Yes I'm sure you're all saying "duh"-
Ireland is a high tax economy on Income for all income tax payers and whatever supplementary income they earn over 35K - it's not unique to people with leveraged property investments.

The UK also have a different taxation regime for a lot of investments like ISAs and dividend income from shares also - higher tax free thresholds for dividend income unlike here.

The UK have also changed landlord taxation in the past few years to increase the taxation burden on landlords - mortgage interest relief mainly has been reduced to the standard rate
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15-01-2020, 23:04   #117
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It would be 40% + USC 7% + PRSI 4% = 51% * (1500 rental income - 350 mortgage interest).
You pay USC and PRSI on rental income too??

Starting to understand why landlords charge crazy rent so...
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15-01-2020, 23:09   #118
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You pay USC and PRSI on rental income too??
Correct.
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15-01-2020, 23:53   #119
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Correct.

But that's only right and makes logical sense too. It is income and you are not writing down an asset over time. Even if you were allowed to do that, then you'd need to get taxed on the entire value at the end once it had been written to zero.

If you could get away without paying any tax on either end it'd be a massive loophole for avoiding tax.
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16-01-2020, 06:44   #120
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The Irish construction sector is pretty much at capacity right now. Doesn’t matter if it’s private or public - there won’t be more houses.
Since 2007 real inflation adjusted salaries in eastern europe have more than doubled and unemployment rates are below 4%. No one is coming here to work as a full time employee. There a plenty of cash-in-hand folk still working here for refurbishment jobs, but professional builders and the state can’t hire on these conditions.

Making workers hand over half their cash (tax) so the government can provide an easy life (dole, A rated new house) to those who never work is simply never going to work. Nurse emigration is kind of the same thing.
Crazy that there’s a builder/trades shortage in a country with a real unemployment rate of almost 10% (Live Register rate + Live Register Activation Programmes).
The construction sector is at capacity because government and industry have deliberately prioritized commercial construction to create a further hurdle to soving the housing crisis - the government has ample ability to take labour from commercial construction, by e.g. limiting further construction projects to 75%+ residential per building.

The latter is a straw man.
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