Buy to let as a group

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RebelRebel73

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Myself and two siblings are thinking of purchasing property to let, equally, between the three of us. Can anyone advise how this is possible, and what are the tax implications?
 
RebelRebel73 said:
Myself and two siblings are thinking of purchasing property to let, equally, between the three of us. Can anyone advise how this is possible, and what are the tax implications?
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I am sure it's possible and I would not think it would be difficult tax wise. We are a couple and divide by 2 the income and charges (not a tax expert). Not a chance that I would do that though. There are both work and risks involved. Costs need to be covered all year long (ei who buy and pay for the new washing machine at the end of January when cash flow after Christmas is low). Who goes and check the washing machine and take charge of the repairs? Who clean after tenants? Who takes the decision to chose a tenant who becomes a nightmare 6 months later? When and who decide to sell? What happens if one of you needs the money? If you want to continue to speak with your siblings, don't do it.
 
I hear you. Yes, we would have to agree a lot of things in advance. I’m thinking we should hire a letting agent. Which, of course will detract from profit. I’m thinking along the lines of a 5 year project. And, if anyone wants to sell at that point, we all have to agree.
 
Brendan Burgess said:
And if you have a mortgage, if one does not pay their share, the others will have to pay it or else have their credit record ruined.

Brendan
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Yes, well, any mortgage would be v small, and would be paid by some of the rental income each month, so it wouldn’t be up to any individual one of us. It would come from the central pot, so to speak.
 
Premos said:
I am sure it's possible and I would not think it would be difficult tax wise. We are a couple and divide by 2 the income and charges (not a tax expert). Not a chance that I would do that though. There are both work and risks involved. Costs need to be covered all year long (ei who buy and pay for the new washing machine at the end of January when cash flow after Christmas is low). Who goes and check the washing machine and take charge of the repairs? Who clean after tenants? Who takes the decision to chose a tenant who becomes a nightmare 6 months later? When and who decide to sell? What happens if one of you needs the money? If you want to continue to speak with your siblings, don't do it.
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I hear you. Yes, we would have to agree a lot of things in advance. I’m thinking we should hire a letting agent. Which, of course will detract from profit. I’m thinking along the lines of a 5 year project. And, if anyone wants to sell at that point, we all have to agree.
 
RebelRebel73 said:
Yes, well, any mortgage would be v small, and would be paid by some of the rental income each month, so it wouldn’t be up to any individual one of us. It would come from the central pot, so to speak.
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That sounds like a best case scenario.

Have you discussed how it'll work under a worst case i.e., tenant stops paying and challenges any and all eviction orders and/or government policy changes.

Tax might not be an issue for all the wrong reasons.

RebelRebel73 said:
I’m thinking along the lines of a 5 year project. And, if anyone wants to sell at that point, we all have to agree.
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Five years could pass very quickly with little to show for it. Fair enough if you all go into with your eyes open with a healthy sense of scepticism.

On a related point are you all of a similar stage when it comes to life goals? It would hopefully help if you all had the same mindset. I could see issues arising if say one person is using this as a way of saving for their first home but for another this is a makeshift pension. Throw in curveballs like marriage and kids and frictions could soon develop.
 
skrooge said:
That sounds like a best case scenario.

Have you discussed how it'll work under a worst case i.e., tenant stops paying and challenges any and all eviction orders and/or government policy changes.

Tax might not be an issue for all the wrong reasons.



Five years could pass very quickly with little to show for it. Fair enough if you all go into with your eyes open with a healthy sense of scepticism.

On a related point are you all of a similar stage when it comes to life goals? It would hopefully help if you all had the same mindset. I could see issues arising if say one person is using this as a way of saving for their first home but for another this is a makeshift pension. Throw in curveballs like marriage and kids and frictions could soon develop.
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We’re all in our 43-50yrs. We’ve recently inherited our family home when our mother sadly passed. We want to keep some for ourselves to spend as we like, and some to invest. My siblings have no pensions established.

With regard to worse case scenario, and a tenant not paying their rent. We would be getting references and making sure, as much as we can that the tenant has a good history and sufficient income. I know these things happen, but if it happened all the time, there would be no landlords.
 
Dr Strangelove said:
I wouldn’t do this with any form of debt.
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Do you mean not to get a mortgage? I was thinking of a small mortgage of about €40,000 / €50,000 to give us a better chance of getting a better quality of property. We would be able to deduct the mortgage interest as an expense when it comes to filing our taxes.
 
RebelRebel73 said:
Do you mean not to get a mortgage? I was thinking of a small mortgage of about €40,000 / €50,000 to give us a better chance of getting a better quality of property. We would be able to deduct the mortgage interest as an expense when it comes to filing our taxes.
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How would the repayment be in addition to the expenses? Would the repayment be covered by rent as well as every expenses and taxes or would you have to contribute with your money?
Personally I can't reiterate how bad an idea I think it is particularly if you have to borrow for it. Your financial situation would be linked to the financial situation of 2 other people. Your siblings should make sure they organise and contribute to a pension.
 
Premos said:
How would the repayment be in addition to the expenses? Would the repayment be covered by rent as well as every expenses and taxes or would you have to contribute with your money?
Personally I can't reiterate how bad an idea I think it is particularly if you have to borrow for it. Your financial situation would be linked to the financial situation of 2 other people. Your siblings should make sure they organise and contribute to a pension.
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I don’t think you read my comment properly. Yes, the mtg would be covered by the rental income. I said we’d be able to deduct the mtg interest as an expense at the end of tax year. Unfortunately my siblings aren’t in a position to organise their own pensions. I’m trying to think of a way we could all benefit from a joint investment
 
RebelRebel73 said:
I don’t think you read my comment properly. Yes, the mtg would be covered by the rental income. I said we’d be able to deduct the mtg interest as an expense at the end of tax year. Unfortunately my siblings aren’t in a position to organise their own pensions. I’m trying to think of a way we could all benefit from a joint investment
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I asked if the mortgage repayment, taxes and expenses would be fully covered by the rental (this is not always the case). I am fully aware of the tax implications in terms of interest.
Personally, as a non accidental landlord for the past 10 years, having seen the price of my property nearly tripled in that time and no major renters issues, I would not recommend it. Not with the current property prices, not with the current legislation, not if you have to borrow, not if you don't have maxed pensions, not if you depend on siblings to buy, not if you are in a rpz zone, not if it is only for 5 years.
 
Premos said:
I asked if the mortgage repayment, taxes and expenses would be fully covered by the rental (this is not always the case). I am fully aware of the tax implications in terms of interest.
Personally, as a non accidental landlord for the past 10 years, having seen the price of my property nearly tripled in that time and no major renters issues, I would not recommend it. Not with the current property prices, not with the current legislation, not if you have to borrow, not if you don't have maxed pensions, not if you depend on siblings to buy, not if you are in a rpz zone, not if it is only for 5 years.
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Thank you. Yes, a big fear of mine is that perhaps property prices have reached their peak. And yes, 5yrs isn’t a long time to see significant property value increase if that is the case.
 
You'll need a very well written, very clear, very detailed, partnership agreement. I'd recommend getting it prepared and witnessed by a solicitor. This is be used to deal with any future disputes, and ensure no misunderstandings.

In truth, I'd recommend against proceeding, for fear of a future dispute, and it impacting on the relationship between the three of you.
 
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RebelRebel73 said:
I hear you. Yes, we would have to agree a lot of things in advance. I’m thinking we should hire a letting agent. Which, of course will detract from profit. I’m thinking along the lines of a 5 year project. And, if anyone wants to sell at that point, we all have to agree.
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Why are you hiring a letting agent, if its to provide a service do things you would rather pay to have done than do yourselves, then fine. If it is to sort out all the issues that might cause friction between siblings forget it. The nightmare tenant can still arise and won't be resolved by the agent.
 
RebelRebel73 said:
My siblings have no pensions established.
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I think this is what you should be concentrating on and not a property as a way of saving for the future,
Pop your money into a good PRSA and forget about it for the next 10 to 20 years per se
Definitely less stress and worry then having to manage family relationships, tenant/landlord/agent relationships, tax and governance issues
 
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