Expenses against rental income

trident

Registered User
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10
Hi,
I read in this forum that pre-letting expenses are not claimable against tax. I just spent several thousand getting an old house up to spec in order to rent it out. Can I use these expenses against rental income? Please say yes!
 

trident

Registered User
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Thanks. I have read the guidance. My property complies with the vacancy terms. It says there is a maximum of Euro 5000 that can be offset against rental income. Would that rental income have to come from a fixed tenancy or could an airbnb stream of income be offset with the expenses? Thanks in advance for all your help
 

NoRegretsCoyote

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570
Relevant Revenue guidance as to whether income from short-term lettings is Schedule D Case I or Case IV is here.

I'm hesitant to give my own interpretation of your own circumstances. But read section 2.1.2.3. and 2.2.2.3.
 

Bronte

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13,304
Hi,
I read in this forum that pre-letting expenses are not claimable against tax. I just spent several thousand getting an old house up to spec in order to rent it out. Can I use these expenses against rental income? Please say yes!
No.

If you sell and make a profit the thousands can be offset against CGT.

Never heard of a 5K rule.

What kind of rental is it?
 

trident

Registered User
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Thanks for all that feedback NoRegretsCoyote. Is there a forum anywhere that discusses the rent pressure zones and how these apply to airbnb? I have to choose between 'normal' renting out of the property and going the airbnb route, and I am in a rent pressure zone. I was wondering if I apply a certain charge for an airbnb stay, am I then stuck with that charge ?
 

Leo

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Is there a forum anywhere that discusses the rent pressure zones and how these apply to airbnb?
RPZ issues are discussed in this forum, but this legislation does not apply to short term lets.

I have to choose between 'normal' renting out of the property and going the airbnb route, and I am in a rent pressure zone.
Note that change of use of a property fully to short-term lets such as AirBnB is usually prohibited in managed developments and generally requires a change of planning permission. Further regulation of this sector is also on the way.

I was wondering if I apply a certain charge for an airbnb stay, am I then stuck with that charge ?
Nope.
 

cremeegg

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The proposals before the cabinet, which it says it intends to make law, would prohibit you doing Airbnb in a property which is not your own home.
 

PaxmanK

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The proposals before the cabinet, which it says it intends to make law, would prohibit you doing Airbnb in a property which is not your own home.
That one really got me riled up alright.
But having spoken to people who do airbnb on other countries where similar rules were brought in there are quite simple ways around it.

And most of the people already doing airbnb in Ireland who I lnow have said they will just continue doing airbnb or actually use different platforms instead if airbnb to be more accurate. New rules or not.

So airbnb is probably still an option even after any new legislation. Right old rip.roaring discussion on the very topic going on on boards.ie that I'm following with interest.
 

Leper

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Reading the Terms and Conditions on the Revenue website is helpful. But, the nuts and bolts of what the OP is asking are as clear as muddy water. What he thinks are his costs and what Revenue thinks his costs are, are rarely the same despite bona fide receipts. Ask any clerical officer in Revenue. Dealing with Revenue and dealing with insurance companies regarding claims are the same; you are covered by everything until you claim. If you think I'm unfair, then ask yourself why it is taking two years to have a tax appeal heard.

You're about to make a few bob in the rental market so employ a good financial advisor you can trust. The advisor should know the tax ropes, should keep you advised regarding profits/losses and tax liability. Otherwise, you're walking a gauntlet that can bite you financially when you least expect.
 

NoRegretsCoyote

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The proposals before the cabinet, which it says it intends to make law, would prohibit you doing Airbnb in a property which is not your own home.
Not strictly correct. The reported proposals would oblige you to seek planning permission for short-term lets for more than three months a year.

Thanks for all that feedback NoRegretsCoyote. Is there a forum anywhere that discusses the rent pressure zones and how these apply to airbnb? I have to choose between 'normal' renting out of the property and going the airbnb route, and I am in a rent pressure zone. I was wondering if I apply a certain charge for an airbnb stay, am I then stuck with that charge ?
Short-term lets are completely outside the RPZ framework.

Don't get too stressed about RPZs. Rent controls don't really apply if you are letting the property for the first time, you only have to prove that the rent you are charging is not out of line with advertised properties in the area. Most advertised rents are still - in my experience - for first lets.

Over the long-term I think the RPZ issue may be moot. The big increase in rents took place 2013 to 2018 on the back of a very strong increase in the economy and total lack of supply of new builds. Remember rents had fallen 25% between 2008 and 2011 and represented very good value at that point.

Rents are close to saturation with regard to incomes in big urban areas by now. People will simply go elsewhere or stop moving to Ireland.

So even if you have a rent-controlled property over a few years of 4% increases you will catch up to normal levels. In the long run a normal market shouldn't see increases of below that in any case.


To answer your final question, if you receive planning permission to use it for short-term letting you will still be able to use it as your PPR.
 

PaxmanK

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Not strictly correct. The reported proposals would oblige you to seek planning permission for short-term lets for more than three months a year.



Short-term lets are completely outside the RPZ framework.

Don't get too stressed about RPZs. Rent controls don't really apply if you are letting the property for the first time, you only have to prove that the rent you are charging is not out of line with advertised properties in the area. Most advertised rents are still - in my experience - for first lets.

Over the long-term I think the RPZ issue may be moot. The big increase in rents took place 2013 to 2018 on the back of a very strong increase in the economy and total lack of supply of new builds. Remember rents had fallen 25% between 2008 and 2011 and represented very good value at that point.

Rents are close to saturation with regard to incomes in big urban areas by now. People will simply go elsewhere or stop moving to Ireland.

So even if you have a rent-controlled property over a few years of 4% increases you will catch up to normal levels. In the long run a normal market shouldn't see increases of below that in any case.


To answer your final question, if you receive planning permission to use it for short-term letting you will still be able to use it as your PPR.

The big difference is in your rights as a landlors. If you do airbnb the property is all yours and you can change your mind and do what you like with it depending what suits you.

If you do regular letting once you hand it over to a tenant you are basically giving it away and have no control. The tenant can stop paying the rent and can tell you to get lost. You have to jump through hoops that will take you at least a year or more likely two to get your property back. All this is okd by the government.

Only a nut case would rent out their property in Ireland today.

Stick to short term. At least you are treated like you actually own the property.

Sure the latest is that you won't even be allowed to ask a tenant to leave even if you are selling the property. Whose going to buy a property with someone in it who won't leave? Noone.

I'm following a thread on airbnb on boards.ie at the moment that has some great discussion going on in it.
 

NoRegretsCoyote

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If you do regular letting once you hand it over to a tenant you are basically giving it away and have no control. The tenant can stop paying the rent and can tell you to get lost. You have to jump through hoops that will take you at least a year or more likely two to get your property back. All this is okd by the government.
This is a gross exaggeration. Most landlords and tenants have a good relationship. There are over private 200k tenancies in Ireland at any time and only about 1% of them result in an RTB judgement.

There is lots you can do to mitigate the risk of a bad tenant. You can't eliminate it entirely, and if you have a very bad one it takes a long time to get rid of them.

There are also plenty of obvious risk (specifically damage) that can come from short-term lets.
 

PaxmanK

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This is a gross exaggeration. Most landlords and tenants have a good relationship. There are over private 200k tenancies in Ireland at any time and only about 1% of them result in an RTB judgement.

There is lots you can do to mitigate the risk of a bad tenant. You can't eliminate it entirely, and if you have a very bad one it takes a long time to get rid of them.

There are also plenty of obvious risk (specifically damage) that can come from short-term lets.
Are you a property investor?
If you aren't, you may know a few. Speak to them about the way it is now.
Even just read what property investors have to say on ask about money and boards.ie and you will get a feel for the state of play at the moment.

The person whw asked the question will do their own research anyway I assume. And I know what conclusion they will come to already, but they will do the research so they get an informed opinion.

Couple of good discussions going on here at the moment

boards.ie/thread/2057923097/30

boards.ie/thread/2057942446/1

That's just two. You'll find lots more. And you'll find lots on askaboutmoney too.
 

Gordon Gekko

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3,576
There is far too much scaremongering.

There are some steps to take to mitigate your risk:

- Get three months’ rent as a deposit

- Get proper references and talk to the people

- Be sensible about the profile of the tenant you want (e.g. students or trainee professionals vs a married couple or a retired person)

- Do your own due diligence on the person; Ireland is a village, someone you know will probably know the person or work with them. Use your existing network to find a tenant. Given the rental crisis etc, someone you actually know is probably looking for a place

- Don’t rent out a place that you wouldn’t live in yourself; my sense is that tenants sometimes rationalise bad behaviour on the basis of the way that they perceive themselves being treated

- Don’t accept HAP tenants or people on social welfare; it’s illegal to discriminate so rule them out in other ways
 

JoeRoberts

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491
I second Gordon's advice and would add to insist on a guarantor to cover up to 2 years rent in a case of overholding. That will weed a lot of potential bad tenants out.
 

Gordon Gekko

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I was watching something yesterday and Direct Line were advertising (in the UK) for landlords’ insurance which covers non-payment of rent for up to 2 years.

Does such a product exist here?
 

Leo

Moderator
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Are you a property investor?
If you aren't, you may know a few. Speak to them about the way it is now.
Anecdotal evidence is often wide of the mark. Like any issues. Those who have positive experiences are far less likely to post on internet forums.

If the situation really was that dire you'd have to wonder why none of these landlords are taking cases to the RTB.
 
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