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Renting a house to the Local Authority

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Comments

  • #32
    TSQ
    Registered Users Posts: 283 ✭✭TSQ


    The_Conductor wrote: »
    The LA/Council pay the RTB registration fees etc- they *do not* pay LPT or other fees associated with the ownership (in some cases they have paid Management Charges in apartments- however, this isn't the norm either).

    So no- you are still liable for the LPT, Management fees etc- the council cover the RTB registration requirements.

    I think the tenant is liable for LPT on long leases (20+ years) not owner. If you are letting to the council rather than to individual tenants then council should pay


  • #33
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,278 Mod ✭✭✭✭The_Conductor


    TSQ wrote: »
    I think the tenant is liable for LPT on long leases (20+ years) not owner. If you are letting to the council rather than to individual tenants then council should pay

    Yes- anything over 20 years- or a lifetime right of residence, and the occupier, rather than the owner, is liable for LPT. Leases of 20+ years are rarer than hens teeth however, though lifetime rights of residence have soared (tends to be an entirely tax compliant manner of giving children an inheritance in your lifetime- which shelters the property from other schemes such as the Nursing Homes Support Scheme (7.5% per annum of the value of a PPR to a max of 22.5% of the value of the property).

    There is some extremely aggressive tax planning going on out there........


  • #34
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    Mad_maxx wrote: »
    I see no merit in REITs at all, at the end of the day it's just another type of security you are buying, like any stock, you have no control over how the company is run, yields are no better than on any of the main European index funds but without any sector diversity

    I'd buy the city of London investment Trust quicker
    The benefit of a REIT as opposed to directly investing in real estate, for someone who explicitly wants to invest in Irish property is clear:

    I do not put all my eggs in one risky basket. One bad tenant can wipe out my profit for years. With a REIT that can't happen as you spread the risk of the bad tenants among many investors.

    The downside is that you can't generally leverage (ie take out a loan to buy REIT shares and use the dividends to pay back the loan) whereas you can take out a mortgage for real estate.

    I agree that diversity is good. I have very broad based ETFs myself (and some let real estate that I accumulated along the way but never BTL). I do not have any REIT stock except what's in my ETFs. I was specifically talking about the case of someone wanting to invest in Irish property, where the legal situation makes direct ownership fairly risky. I disagree with the idea that REITs are bad because you have no control how the companies are run. I mean if you apply that logic you should not invest in any shares from any company unless you can acquire a controlling interest!


  • #35
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    The_Conductor wrote: »
    Yes- anything over 20 years- or a lifetime right of residence, and the occupier, rather than the owner, is liable for LPT. Leases of 20+ years are rarer than hens teeth however, though lifetime rights of residence have soared (tends to be an entirely tax compliant manner of giving children an inheritance in your lifetime- which shelters the property from other schemes such as the Nursing Homes Support Scheme (7.5% per annum of the value of a PPR to a max of 22.5% of the value of the property).

    There is some extremely aggressive tax planning going on out there........
    In Germany if I do this there is an added advantage: The property is deemed to be worth less because it has a burden on it and the value for inheritance tax purposes is thus reduced. I wonder is that the case in Ireland also.


  • #36
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,278 Mod ✭✭✭✭The_Conductor


    murphaph wrote: »
    In Germany if I do this there is an added advantage: The property is deemed to be worth less because it has a burden on it and the value for inheritance tax purposes is thus reduced. I wonder is that the case in Ireland also.

    Yes- however it depends on when the inheritance vests- e.g. a living inheritance is worth significantly less to the recipient than a posthumous inheritance (as obviously the right of residence will also expire on the death of the holder of such a right). Nonetheless- the lifetime inheritance rights of a child remain constant- regardless of when they inherit- so its far more efficient to inherit when your parent is still alive- and your parent continues to live in their property with a lifetime right to do so- as the property is thus devalued from an actuary perspective (though if its not going to be sold until there is clear claim to it- obviously this is immaterial- what matters is you cannot sell it right here right now- so its worth less).

    Yes- is the short and simple- its the same here- the bigger difference is a much lower inheritance threshold in Ireland than in Germany- so while property may be worth less in Germany, it may not matter if the recipient stays under their threshold- however, in Ireland- a far higher proportion of inheritance recipients hit their thresholds- because of both Irish property prices- but also the lower Irish thresholds.


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  • #37
    murphaph
    Registered Users Posts: 19,018 ✭✭✭✭murphaph


    Thanks for the clarification. It may prove useful to our own circumstances actually given the fairly low thresholds at home!

    Yes here in Germany the gift/inheritance tax thresholds are significantly higher (440k per parent to child) and gifts are only considered within a rolling 10 year window, so a property I inherited 11 years ago is no longer considered when calculating tax payable today.

    Practically speaking only fairly wealthy people in Germany ever pay inheritance tax and anything they inherit from their parents and even then it starts at 7% and rises linearly with the value of the inheritance over the threshold.


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