Any rumours will they tax landlords less than current full tax rate?

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I have also been a tenant, and a home owner and a landlord, albeit not at the same time. I am no longer a landlord but when I was I always found it strange that I wasn't taxed on my 'profit' but rather on my turnover (ie the rent) minis a relatively limited number of allowable deductions. For instance if I owned a sweetshop all works to my shop would be tax deductible, if I am a landlord pre letting expenses are not tax deductible, not are the capital costs of improvements to the dwelling. Why?
 
PebbleBeach2020 said:
Better to do nothing so is it? And stick their head in the ground. And hope things change if their own accord.
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Where did I say that?

I stand by my prediction. The government (and its eventual successor) will do precisely as you describe, and for the reason I stated above.
 
T McGibney said:
Where did I say that?

I stand by my prediction. The government (and its eventual successor) will do precisely as you describe, and for the reason I stated above.
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You have three postings, the one above, a comment re make baldness and another. I don't see what you are suggesting, can you explain to me please?

Maybe you are confusing threads with your own suggestions or opinion.
 
PebbleBeach2020 said:
You have three postings, the one above, a comment re make baldness and another. I don't see what you are suggesting, can you explain to me please?
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I'm puzzled why you need to ask. The OP asked, as per the title of this thread: "Any rumours will they tax landlords less than current full tax rate?" I've clearly given my opinion on the likelihood of this happening.

PebbleBeach2020 said:
Maybe you are confusing threads with your own suggestions or opinion.
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if you suspect that any of my comments here or elsewhere are inappropriate, feel free to use the report function, instead of trying to badger me about them.
 
T McGibney said:
Where did I say that?

I stand by my prediction. The government (and its eventual successor) will do precisely as you describe, and for the reason I stated above.
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sorry, but i thought you disagree with my posting and then here you say the government will do precisely as I've described. I just got lost by what you've said.
 
Is you owned a small sweet shop (or farm) you could avail of various CGT reliefs on disposal of the business. Landlords get nothing. Not that the government is going to give the same reliefs in the current climate.
The long term solution is the build more, so maybe the government will introduce more Section 23 Schemes.
 
Surely if rent is taxed at a lower rate than other income, people/firms will have an incentive to declare more rental income than other income?

I can think of directors of firms who typically own the comm properties that their firms use, increasing the rents that they charge their businesses?
 
cremeegg said:
While it is dispiriting to see 50% of the profit going in tax that is not the issue for me or I suspect most landlords.

International comparisons show that the cost of renting in Ireland is very high, the cost of buying housing (and so what a landlord selling can expect) is not as excessive.

No landlord, I suspect is getting out because they can't make a profit.

The issue is regulation and the pitfalls of the RTB. In short it takes a long time to evict a non-paying tenant, and there is a fear that there will be restrictions on the freedom to sell.

For once its not all about money.
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I disagree with this.

The law has swung more in favour of the tenant when it comes to security of tenure but the RTB was always useless when it came to non-paying tenants, etc. If you are in the landlord business seriously and long term then not a huge amount has changed on the regulation side.

Compared to before there is a huge difference on tax. Here is the tax treatment of rental profits for someone with €50k income from their regular job in 2007 and today.

20072022
Income tax40%40%
Health levy+income levy (now USC)4%8%
PRSI0%4%
CGT on gains20%33%
LPT on value of property0%0.1% (approx)

So you have 8% more of your rental income taxed than before, you have a much higher tax on any capital gain, and you have an annual tax on the value of the property that cannot be offset against another tax. Add to that the practical unavailability of finance for buy-to-lets and the arithmetic for a landlord is just far worse than it was 15 years ago.

Landlords are leaving the market for a few reasons, mainly because so many are out of negative equity. The problem is that so few new landlords are replacing them. There are two reasons for this. The first is the reluctance of banks to lend for BTLs, and there is not much the government can do about this. The second is the tax treatment of landlords which is of course fully in the gift of the government.

Noonan's 2011 move to give a CGT exemption for a anyone who bought and held property for seven years really helped to put a floor on the property market, particularly on the commercial side. I think softer CGT treatment for the committed landlord again today would make a big difference. For example in Germany there is no CGT for a landlord who holds and lets a property for ten years before selling. I think this kind of policy would really help to get investors into the market. There is still a lot of investable funds out there and if people saw gains on property being taxed a lot lower than gains on other investments I think it would really attract them in.
 
@NoRegretsCoyote, An excellent post.

I think you are absolutely correct with regard to CGT. Investors are more likely to put money in housing if they can exit on fair terms.

As regards the taxation of rental income although you are correct in the detail, the rental income from any given property today is approx. twice what it was in 2007. Paying 8% more in tax is not critical. Indeed, there may well be a connection between higher taxes and higher rents. If the landlords cost is higher he will seek more rent.

As regards the regulation not changing, I am not so sure. Fortunately I have never had to evict a tenant but I suspect that it would be more difficult today. Also the political background around regulation does matter. The trend is going against the landlord.
 
Mocame said:
Looks like the government is proposing extra tax reliefs for landlords in return for very long leases:
www.independent.ie

Landlords could be offered Budget tax breaks if they give long leases to tenants

Tenants are in line for a first of its kind tax credit on their monthly rent under measures being considered for the Budget later this month.
www.independent.ie www.independent.ie
Will that be enough to stem the exodus of landlords from the market?
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It should incentivise professional landlords, both big and small, to offer longer term leases. It won't do much for the amateurs who see it as an alternative pension fund, don't want to put the work in, and really shouldn't be landlords in the first place. In the longer term that will make for a more stable market. In the short term it won't do much.
 
The story itself is a bit odd:

The package being drawn up could also include extra tax reliefs for private landlords subject to strict conditions. One of these is expected to be that they commit to provide their property as a long-term let, meaning a tenant would have fixity of tenure.
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Any landlord is de facto committing to a long-term let. After six months any tenancy automatically converts to a "Part 4" tenancy and can only be ended on specific named grounds such as serious renovation, landlord or a family member moving in, or intention to sell. The longer a tenant stays the longer the notice period, and after as little as a year a tenant needs to be given 6 months' notice. The grounds to end the tenancy on a "no reason" basis after six years are being phased out, and were seldom used anyway.

When compared with other EU countries, Ireland has very few domestic properties available on five- or 10-year leases.
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I would think that very few tenants in Ireland actually want a five- or ten-year lease.

The RTB tenant survey of 2021 had a few interesting facts in this regard:
  • Just 14 % of tenants had been in the private rental sector for 11 years or more. The mean was five years and the median was just three years.
  • The median tenant had been in their property for just 2 years, the mean was 4 years. Just 6% of tenants had been in one property continuously for 11 years or more.
  • 7% of private rented tenants actually own a property already!
  • Only 3% of tenants rate their experience as negative or very negative
  • Only 25% saw themselves as private renters in ten years' time, but as per the first bullet point in reality that turns out to be a lot lower
On the demand side renting is culturally something people do when they move for a job, suffer relationship breakdown, or when they're saving for a house. Obviously it's something that some people get stuck in long term but for all sorts of reasons if you want to settle in one place then you are much better off with a social tenancy or owning your own house. I could be wrong, but I don't see Ireland turning into Berlin any time soon where you have a large fraction of the population happy to rent privately very long term.

The big problem with private rental in Ireland is the cost. The median tenant pays 30% in net income in rent, the mean is 35%, and 27% of renters pay over 40% of net income in rent. I don't think that this is socially desirable by any means and a rental tax credit is probably no bad thing given the tax benefits of owner occupancy. Rent controls have their place over the short term too but the long term solution consists of only three things: supply, supply, and supply.

Government policy has to be about nothing else other than getting new landlords into the market and ideally getting them to finance new builds. Sadly I don't see much more evidence of this.
 

2007		2022
Income tax40%40%
Health levy+income levy (now USC)4%8%
PRSI0%4%
CGT on gains20%33%
LPT on value of property0%0.1% (approx)


Does 8% USC not start after 70k approx?

Does the USC apply to gross rent or net rental profits?

Does PRSI apply to gross rent or net rental profits?
 
Protocol said:

2007		2022
Income tax40%40%
Health levy+income levy (now USC)4%8%
PRSI0%4%
CGT on gains20%33%
LPT on value of property0%0.1% (approx)


Does 8% USC not start after 70k approx?

Does the USC apply to gross rent or net rental profits?

Does PRSI apply to gross rent or net rental profits?
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It's charged on net rental income though capital allowances and rental losses brought forward are not deductible.
What is strange is that only 75% of mortgage interest is counted as a cost so the landlord pays income tax on 25% of that cost.

Pensioners who are Landlords are not charged the 4% PRSI.
 
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I would be nervous as hell entering into a long term lease with a tenant……only for a new government (with Sinn Fein in the mix) to subsequently roll in and get rid of the ability to terminate leases when selling a rental property. I’d feel much safer knowing that I still have the flexibility to (give notice) terminate my leases if and when any such legislation starts to make its way through the Oireachtais. This will be my trigger for exiting, and I ain’t gonna do anything to limit my ability to take this action…..regardless of any tax incentive.
 
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