Have I calculated expenses/tax correctly

Peckham

Registered User
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Currently exploring the possibility of moving out of our current house (in negative equity), renting it out and buying a new one. Just want to check that my rental income calculations are correct.

Total expenses
Management fees : €200
House insurance: €300
Mortgage protection: €500
Letting agent: €1000
Mortgage interest (75%): €2610
Boiler service: €80
PRTB: €90
Wear & tear (12.5% of €1500): €187.5
Labour: €500

Total: €5,468

Rental income: €13,800

Tax: (€13,800-€5,468) @ 53% = €4,416

Assuming a "profit" when mortgage repayments (no TRS) are deducted from rental income of €760 and expenses above of €2,670 this means that renting out will cost about €6,300 per year.

Does all this seem correct?
 
Looks good apart from your concept of "profit".

You should not be deducting the mortgage repayment when calculating profit. You should be deducting only the interest part of it. The rest is a repayment of capital.

So the profit after tax is
Rental income
less expenses
less interest
less taxes

If you are calculating the cash flow, then deduct the full repayment

Brendan
 
Thanks Brendan. You are, of course, correct - I was talking about cashflow, so "surplus" might have been more appropriate.

It's a whopping bill, for something that isn't generating immediate financial benefit. There must be plenty of accidental landlords wandering around blissfully unaware of all this...
 
Currently exploring the possibility of moving out of our current house (in negative equity), renting it out and buying a new one. Just want to check that my rental income calculations are correct.

Total expenses
Management fees : €200
House insurance: €300
Mortgage protection: €500
Letting agent: €1000
Mortgage interest (75%): €2610
Boiler service: €80
PRTB: €90
Wear & tear (12.5% of €1500): €187.5
Labour: €500

Total: €5,468

Rental income: €13,800

Tax: (€13,800-€5,468) @ 53% = €4,416

Assuming a "profit" when mortgage repayments (no TRS) are deducted from rental income of €760 and expenses above of €2,670 this means that renting out will cost about €6,300 per year.

Does all this seem correct?
Your wear and tear amount seems to be very low - are you renting the property unfurnished?

Also, what is the €500 for 'labour'? You can only claim for work carried out to the property once the first letting has commenced (pre-letting expenses are not allowable apart from advertising, letting fees and legal fees.

Your own 'labour' is not an allowable expense and you're right about the accidental landlords . . . ;)
 
Your wear and tear amount seems to be very low - are you renting the property unfurnished?

Also, what is the €500 for 'labour'? You can only claim for work carried out to the property once the first letting has commenced (pre-letting expenses are not allowable apart from advertising, letting fees and legal fees.

Your own 'labour' is not an allowable expense and you're right about the accidental landlords . . . ;)

Renting it furnished (probably), but as most of the furniture will be the stuff that's already in the house, I can't deduct that. Probably a little conservative on this, and it will probably end up being higher.

Labour is a figure I picked from the air, but will include accountant fees as I'd like to get at least the first year's return calculated by an accountant. Could save me a few quid in the longer term.
 
As a landlord what is the wear and tear aspect?
Is it the building or the contents? Where do you offset this?
On the Form 12 where does this go?
Is a life policy on the mortgage allowable as an expense?
Thanks in advance
 
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