1st letting figures guesstimate

O

OneMoreCupOf

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Hello All, I'm looking for some guidance with guestimating rental figures.

We are thinking of letting out our 2 bed house in Lucan and buying a 3 bed as primary residance (hopefully for no more than €260)

The going rental is €900 ,the current repayments for our variable mortgage is about €850 inc insurance. The house is 7 years old and in good cond.

After reading some threads here I have estimated some figures.

Max yearly rental income : €10,800 , (€900 x 12)

Tax deductibles:
Estimated interest €4000 - €3000 tax deductable (75%)
Furniture/fittings wear and tear - €20,000 x 12% = €2,400
General repairs €500
Bin charges €300
Advertisment costs €200

Taxable income €10,800 - €6,400 = €4,400
Tax due approx €2,200

Am I somewhere in ballpark with these figures? Are there any tax deductables I'm missing to reduce tax due ?

thanks for reading.
 
I would have thought that the 2,400 a year for furniture and fittings is quite high. I can see where you get it from... you estimate that the entire lot must be replaced every 8 years.. not sure if this is reasonable or not.


Presumably only receipted expenses can be claimed,.. not depreciation on fittings.
 
Are you sure you will get 900 for a 2 bed in Lucan? There are 3 beds available for that price. I would say 800 is more likely. You should also do your figures based on renting out for 10 or 11 months rather than 12. It rare you will get a ful 12 months every year.

You should also factor in a 2-4% increase in interest rates.
 
Have you factored in the fact that you will need to change interest rate to Buy to let rates and they are considerably higher
 
Thanks for the replies.

€900 is still the going rate in the area, house nearby just rented for same.

The worrying thing about it is the interest rate rising, more planned hikes now and for next month. On the flipside this should bring prices down a little for buying and hopefully keep the rent the same. :eek:

I'm still a bit in the dark over the whole process though, anyone know form experience where would we stand if we got 10 months rent @ €900 ,joint ownership with myself in the higher tax braket and my wife in the low tax bracket. Without any major problems(repairs /tentant trouble etc) how much tax would we pay between us (to the nearest €500) ?

thanks for reading :)
 
I'm confused about this stuff as well - in the OP's guesstimates, they have €50 per month left in their rental account once the mortgage has been paid (€900 rent - €850 mortgage) - that basically leaves him/her with €600 to pay a tax bill of €2400, again using the estimated figures. Where does the shortfall come from or can they record a loss for the year?
 
Hello again,

I've been chatting to a couple of people I know who are renting out places. In reality it works out better than my guesstimates on paper.

Advice I've gotton is a good accountant should be able to reduce the tax due to no more than say €1000. All estimations of course ,but I'm feeling a little more positive about it if we get ourselves in a position to do it (interest rate/lender offer and purchase price of a decent 3 bed ,dependable)

cheers
 
I'd love to know what advice your friends have given you?
A "good" accountant can only reduce your tax bill using legitimate expenses. There is no magic wand. I have never managed to reduce my tax bill below a thousand. Having said that, I have heard of plenty of dubious expenses being claimed.
One thing you could look at is if the house is in your wife's name then the rent is paid to her and tax is at the lower rate. But that might mean changing the mortgage to her name only and it may not be possible now.

One other thing to consider - do you really want to be a landlord? It can be a pain in the a** if you have difficult tenants. Read some of the threads from landlords and you will see what I mean. Are you desperate to move or could you wait til the market picks up? Any chance of selling your own house first? Have you approached any lenders yet? A few years ago lenders were mad keen on these ideas - rent your old place, buy a new one - not so keen these days. I would imagine that securing two mortgages will be extremely difficult.
 
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