Investment apartment to rent out

thebourke · 03-08-2017 4:15pm #1

i am looking at buying an investment apartment for 60,000 to rent out in Carlow.Can anyone tell me how much tax/expenses you would be paying if the rent was for example 500 euro per month.I also own my own house.Would it be better to rent out the apartment or use airbnb
I am living in Dublin and own my own house.I would require no mortgage for the apartment as i have the 60k in savings.

skallywag · 03-08-2017 4:25pm

As far as I am aware the tax which you would be liable for would be the equivalent of the same amount which you would pay if your salary was increased by the same amount as the rent which you will receive.

Samuel T. Cogley · 03-08-2017 4:33pm

thebourke wrote: »

i am looking at buying an investment apartment for 60,000 to rent out in Carlow.Can anyone tell me how much tax/expenses you would be paying if the rent was for example 500 euro per month.I also own my own house.Would it be better to rent out the apartment or use airbnb
I am living in Dublin and own my own house.I would require no mortgage for the apartment as i have the 60k in savings.

AirBnB or not you can write off around 50% of the rent in tax, it'll be a little less but that's a good rule of thumb. So you'll make €250 per month on €60,000 or roughly 5% ROI. Now that 5% is contingent on being paid and nothing going wrong with the gaffe, which to be fair some of that cost can be written off against tax so you're looking at a net ROI of more like 2-3%.

Has your Financial Advisor suggested any investment with a better return and lower risk?

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thebourke · 03-08-2017 4:42pm

I don't have a financial advisor.I thought with airbnb there was no tax?

skallywag · 03-08-2017 4:47pm

All income you make is liable to be taxed.

Getting a financial adviser might not be a bad idea ...

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jimmycrackcorm · 03-08-2017 5:03pm

A more tax efficient method would be to transfer 500 euro from your savings every month to your current account but get your work to pay 1000 from your salary into your pension as an AVC.

After 10 years your 60k savings would be replaced by at least 120k in your pension. Over that term it's very likely that it well also grow much more than the 2 / 3 pc rental ROI.

Grumpypants · 03-08-2017 5:08pm

You pay tax on rent as if it was PAYE income, so if you already make over 34K you pay 40% plus PRSI and USC. It comes to about 58%.

You need to then factor in upkeep.
Young family with 2 kids at home all day = €50-100.
Professional Couple out of the house 8-7 = €100-200.

Then think about insurance, management fees etc another 50-100, which all pretty much ensures the rental income is wiped out. You are always at the mercy of the tenant just deciding to stop paying rent. If that happens it takes about 18 months to get them out. Costs a few grand in legal costs and you will likely have to repair the damage left after without any come back.

Samuel T. Cogley · 03-08-2017 6:19pm

thebourke wrote: »

I don't have a financial advisor.I thought with airbnb there was no tax?

Okay so a FA and accountant would be your first stops once you have that information a solicitor or agent would be an idea for leases etc. and then I'd read over some of the threads in this forum about what happens if the tenant just decided to stop paying rent.

In regards to AirBnB would you use an agent or be there every couple of days to hand over keys etc. AirBnB is more hassle but less risk.

Nika Bolokov · 03-08-2017 6:39pm

jimmycrackcorm wrote: »

A more tax efficient method would be to transfer 500 euro from your savings every month to your current account but get your work to pay 1000 from your salary into your pension as an AVC.

After 10 years your 60k savings would be replaced by at least 120k in your pension. Over that term it's very likely that it well also grow much more than the 2 / 3 pc rental ROI.

This assumes there's no drop in stock markets.

jimmycrackcorm · 03-08-2017 10:00pm

Nika Bolokov wrote:

This assumes there's no drop in stock markets.

Unlike property:). Over the long term stock markets outperform property.
In the OPs scenario what's hitting him heavily is the tax on the rental income.

Carl D · 12-04-2020 3:18pm

Hi not sure if this is the right thread if not please move thanks

So I'm 28 and living at home . Working full time my salary is 30k after tax I'm not in a job where my salary would be 80k at some point .

So I put a granny flat at the end of my parents house which I rent out and get 1,200 a month , I pay my mother a percentage of it each month . Its pretty much payed off now . This will pay off my mortgage when my self and parnter get our own place we are saving at the moment.
We will be buying new or building on her familys land just outside Dublin.

Im looking into buying a property in dublin for 150k more than likely will be a 1 or 2 bed apartment as an investment for the future and let it pay itself off over the next few years.

OR

I could open a creche on the side of my parents house. My partner would like to run her own creche and my parents think it's a great idea and have no problem with it once it's done right. I'm very Interested in owning my own creche, I know there is insurance and everything involved but I would do a part time course so know how to run it and have all the certificates I need to be able to own and work In it .

If you have and similar story's or own a creche I would appreciate it if you give me any tips . Thanks in advance

Graham · 12-04-2020 3:37pm

Carl D, you have already posted this question in another forum. Please don't post the same thing in multiple places.

Thread closed.

Investment apartment to rent out

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