LPT: Every tenant of mine is paying it.
- Thread starter oldnick
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mandelbrot
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How are you managing that - Are they not paying rent under a lease?
I told my tenants over a year ago that I could not absorb the forthcoming property taxes, and being the kind LL that I am would not raise rents in 2013 ,despite the general increase in rents in the area (mid Dub and suburbs), except for the property tax..
Each LL can have their own approach to rent reviews . I suppose it depends on how well one gets on with tenants, how greedy one is and ,of course, what prevailing rents in the area are.
To me it was important that the tenants know that the govnt is taking this-and-that out of my pockets, and that any extra rent goes straight to the govnt. The tenants may not give a hoot; it's my foible that they should be informed .
Anyway, I originally thought the property tax would be much higher , and that it would be introduced at the start of 2013. I was telling apt tenants that the rent increase in 2013 may be a much as a 100 euros per month per apt, and house tenants twice that amount.
So tenants were delighted when I postponed the increase till 1 July at much lower rates (20- 30 per apt per month -50 for the house.)
Any LL who does not cost the property tax into rent is losing too much money.
Each LL can have their own approach to rent reviews . I suppose it depends on how well one gets on with tenants, how greedy one is and ,of course, what prevailing rents in the area are.
To me it was important that the tenants know that the govnt is taking this-and-that out of my pockets, and that any extra rent goes straight to the govnt. The tenants may not give a hoot; it's my foible that they should be informed .
Anyway, I originally thought the property tax would be much higher , and that it would be introduced at the start of 2013. I was telling apt tenants that the rent increase in 2013 may be a much as a 100 euros per month per apt, and house tenants twice that amount.
So tenants were delighted when I postponed the increase till 1 July at much lower rates (20- 30 per apt per month -50 for the house.)
Any LL who does not cost the property tax into rent is losing too much money.
A question for accountants:-
I state in my last post that I am charging just what the tax is.
But should LLs charge more -to take into account the fact that this is a non-deductible cost ?
EXAMPLE -on monthly basis.
1) Pre-property tax
==============
Rent= 1.000 minus costs 900 = income of 100, at 50% tax = 50 NET PROFIT
2) With property tax
==============
if property tax amounts to 40 per month and LL increases rent by same amount....
Rent 1040 minus deductible costs 900 = income of 140, at 50% tax = 70 profit MINUS THE 40 LL pays for property tax. ACTUAL NET PROFIT = 30.
So, LL netts only 30 euros per month as opposed to 50 euros , even if he charges tenants the proeprty tax amount.
Have I got my sums right? Can this be right?
If so, LLs should charge 20 % more than the property tax!! (depending on amount of rent, costs and tax level)
I state in my last post that I am charging just what the tax is.
But should LLs charge more -to take into account the fact that this is a non-deductible cost ?
EXAMPLE -on monthly basis.
1) Pre-property tax
==============
Rent= 1.000 minus costs 900 = income of 100, at 50% tax = 50 NET PROFIT
2) With property tax
==============
if property tax amounts to 40 per month and LL increases rent by same amount....
Rent 1040 minus deductible costs 900 = income of 140, at 50% tax = 70 profit MINUS THE 40 LL pays for property tax. ACTUAL NET PROFIT = 30.
So, LL netts only 30 euros per month as opposed to 50 euros , even if he charges tenants the proeprty tax amount.
Have I got my sums right? Can this be right?
If so, LLs should charge 20 % more than the property tax!! (depending on amount of rent, costs and tax level)
Thanks Joe90. Am bad at mental arithmetic. The losses are worse than I thought !
I wonder if other LLs were as stupid as me ,not realising that one has to charge TWICE the property tax- in reorder to recoup the loss ?
I suspect some LLs were even stupider and haven't passed it on at all....
Yes, it was Noolan that said something would be done. But posters on AAM so far seem to think not yet.
The LLs of houses, more than apts, will suffer more because the yield is already much lower on houses -even in popular Dublin suburbs -than on apts.
I wonder if other LLs were as stupid as me ,not realising that one has to charge TWICE the property tax- in reorder to recoup the loss ?
I suspect some LLs were even stupider and haven't passed it on at all....
Yes, it was Noolan that said something would be done. But posters on AAM so far seem to think not yet.
The LLs of houses, more than apts, will suffer more because the yield is already much lower on houses -even in popular Dublin suburbs -than on apts.
seantheman
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Tenants aren't liable for the Property tax, LL's are, so for the tenants renting the house you have increased their rent by €600 per annum
Too little an increase it seems judging by my miscalculation....
If a house LPT is €600 p.a. and the LL is on the top rate of tax then the rent should have increased by €1.200 which would still mean no added income for the LL.
Every cent of this €1200 to the govnt in LPT and income tax - none for the LL. Pretty fair ,eh? And pretty stupid of me to only add €600.
However, my tenants are not obliged to pay any extra rent if they don't wish . I give six months notice of any annual rent increase with a choice to vacate the property if they cannot pay that increase. That also seems pretty fair.
Obviously, the tenants are not asked to pay Revenue bills -like LPT - directly to Revenue, nor are they asked to pay the plumber directly for repairs to the boiler, or the shop for new furniture etc
But tenants are liable to pay the rent and the rent must cover costs . If one of those costs is LPT then obviously this must be included in the rent.
How the LL addresses rent increases depends -as I say in a previous post -on the LL. The LL can just raise rents with no explanation or, as I prefer, can explain certain costs to the tenants.
Either way the LPT will be charged to the tenants; it is naive to expect them not to.
The exceptions , those LLs who'll absorb the costs, will be from ..
a)LLs who are making enough income that they're happy to absorb the extra cost, or
b) LLs who will make a loss on letting their properties. Sadly, there are too many of those ,especially the reluctant BTL owners who think any rent is better than nothing just so they keep up the interest payments to the bank.
I don't fit in either category.
If a house LPT is €600 p.a. and the LL is on the top rate of tax then the rent should have increased by €1.200 which would still mean no added income for the LL.
Every cent of this €1200 to the govnt in LPT and income tax - none for the LL. Pretty fair ,eh? And pretty stupid of me to only add €600.
However, my tenants are not obliged to pay any extra rent if they don't wish . I give six months notice of any annual rent increase with a choice to vacate the property if they cannot pay that increase. That also seems pretty fair.
Obviously, the tenants are not asked to pay Revenue bills -like LPT - directly to Revenue, nor are they asked to pay the plumber directly for repairs to the boiler, or the shop for new furniture etc
But tenants are liable to pay the rent and the rent must cover costs . If one of those costs is LPT then obviously this must be included in the rent.
How the LL addresses rent increases depends -as I say in a previous post -on the LL. The LL can just raise rents with no explanation or, as I prefer, can explain certain costs to the tenants.
Either way the LPT will be charged to the tenants; it is naive to expect them not to.
The exceptions , those LLs who'll absorb the costs, will be from ..
a)LLs who are making enough income that they're happy to absorb the extra cost, or
b) LLs who will make a loss on letting their properties. Sadly, there are too many of those ,especially the reluctant BTL owners who think any rent is better than nothing just so they keep up the interest payments to the bank.
I don't fit in either category.
To be fair, I don't think 'stupid' is the correct term here oldnick.
My tenant has a fixed-term lease in which the monthly rent is stated and until such time as that lease expires, I cannot increase the rent.
I'm not going to increase the rent either - I have very good tenants and am competing with many non-compliant landlords in the area who do not declare their rental income, pay no NPPR or PRTB fees, etc. and are therefore able to keep their rental demands low.
I have to keep my rent in line with what they are charging, otherwise I will lose my tenants.
mandelbrot
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If you know this for a fact, why not report it to Revenue?
And if the tenant is a 50% tax payer they have to come up with €160 to give you €80 so you can give the government €40.
Yet another reason why the householder should pay the tax.
I did say in a previous post that a LL's decision depends on prevailing rents in the area.
However, "stupid" was a crass and unfair term to use for those LLs in a difficult position and I apologise.
If ,after paying all costs including the LPT (which if it is non-deductible is costing far more than the actual amount, depending on one's income threshold) a LL is not making a net profit then a better term would be "unwise".
I agree with Mandelbrot re cheating competition.
If people came into my house and stole something i'd report them. I'd do the same with those who are depriving me of income, not by fair competition, but by avoiding all the charges that I pay. Basically, stealing.
However, "stupid" was a crass and unfair term to use for those LLs in a difficult position and I apologise.
If ,after paying all costs including the LPT (which if it is non-deductible is costing far more than the actual amount, depending on one's income threshold) a LL is not making a net profit then a better term would be "unwise".
I agree with Mandelbrot re cheating competition.
If people came into my house and stole something i'd report them. I'd do the same with those who are depriving me of income, not by fair competition, but by avoiding all the charges that I pay. Basically, stealing.
I'm just in the process of doing just that.
My rental property was recently inspected by the local County Council for compliance with Housing Regulations and I got some interesting information from the Housing Officer as to which properties they were planning to inspect in my small estate.
They have compiled their information from the list of NPPR payees and the PRTB registration database. There are 11 properties which are not on either list and the Secretary of the Resident's Association has been told by some of the LL's that they are 'flying under the radar'.
I'm not reporting them to be vindictive, I'm just finding it very difficult to compete with them and had to spend just over €2,000 this year on new windows etc, to bring the property in line with Housing Regs, which are only being enforced on compliant, registered LL's.
I don't think thats entirely correct, regarding rent covering the cost. There are plent of loss-making LLs out there and IMO the rent shouldnt be increased just so a LL can cover their costs i.e. without a proper reason. I wouldnt be happy at all to hear that.
Also I dont think its very fair that a tenant paying X in rent should have to pay more LPT just because LL is on higher rate of tax.......thats LLs problem IMO.
As I tenant I know we will never agree on the above points but I wanted to get a balanced view on this thread, which I think is sorely lacking.
Why is covering costs not a proper reason? or in other words, whats the point in being a LL if you're making a loss?
The LL is limited to when they can increase the rent. The rules are here...
http://www.citizensinformation.ie/en/housing/renting_a_home/rent_increases.html?tab=
T McGibney
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Every business passes on its costs to its customers. This is not an opinion, it is basic economics.
alaskaonline
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To a certain degree, yes maybe - but 100% of these costs, I don't agree. Surely as a LL people knew that it's not just profits. If it was, we all would be LLs 
Obviously there isn't a point! However, I never said this was the intention of LLs......I meant the ones whom due to having bought the property at inflated price and now the rent wont cover the mortgage, due to previous falls in rent. I dont think LL should be just able to put it up in this scenario simply to cover the fact they they made a bad investment and are having to pay for it.