major advice needed on rental income

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pAnTs

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Hi there we are looking for some help, basically my partner bought an apartment in the city centre and rented it out as we wanted to live together. We now live in my apartment. His parents gave him the money for the apartment so he paid for it in cash. He has no mortgage but is paying his parents back every month. This loan has to be repaid within a few years. He has a rental income of €9000 per annum, he's registered with the PRTB and has paid his property tax. We are getting ready to pay his first years tax on the rental income and are getting very anxious as to how high this bill is going to be. Combined with his job he will not exceed the single persons cut off rate and will be under €32,000 per annum for both his job and the rental income. Can someone help with approx how much tax he is liable for. His management fees are €1700 per year so already the profilt he is making is down to €7300, aswell as propert tax and PRTB registration etc it doesnt seem like its worth all the trouble. It feels so difficult to make any headway int his country, when you want to work hard and make something of yourself it seems impossible to do :( can anyone with expertise advice on what he approx will have to pay out in tax and fees etc thanks in advance
 
pAnTs said:
Hi there we are looking for some help, basically my partner bought an apartment in the city centre and rented it out as we wanted to live together. We now live in my apartment. His parents gave him the money for the apartment so he paid for it in cash. He has no mortgage but is paying his parents back every month. This loan has to be repaid within a few years. He has a rental income of €9000 per annum, he's registered with the PRTB and has paid his property tax. We are getting ready to pay his first years tax on the rental income and are getting very anxious as to how high this bill is going to be. Combined with his job he will not exceed the single persons cut off rate and will be under €32,000 per annum for both his job and the rental income. Can someone help with approx how much tax he is liable for. His management fees are €1700 per year so already the profilt he is making is down to €7300, aswell as propert tax and PRTB registration etc it doesnt seem like its worth all the trouble. It feels so difficult to make any headway int his country, when you want to work hard and make something of yourself it seems impossible to do :( can anyone with expertise advice on what he approx will have to pay out in tax and fees etc thanks in advance
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Sorry but how is getting interest free money and using it to rent out a house, working hard?

The management fees are deductible from the rental income as are some of the other expenses. There's a sticky on the site with more details, have a look there.

http://www.askaboutmoney.com/showthread.php?t=5996

http://www.askaboutmoney.com/showthread.php?t=171272
 
If owning the flat and having to pay the money back to his parents is so onerous, why doesn't he sell the flat and give the proceeds to his parents, and come to an arrangement with them about the balance? Or transfer ownership of it to them, and let them have it as an investment property if they'd prefer?
 
well he is working for minimum wage and paying for a masters degree on 20 hours per week, thats working hard....he bought the apartment to try and earn some extra income to get ahead in life so that he can maybe buy a car or perhaps someday hope to own a family home with me.....most of the people he is working with leave their job after a week or so because they earn more money on the dole. He wants to work, he wants to get ahead in life and it seems like the government are stripping any chance of that away from him. There is very little incentive to do anything here. Seems to me like some people do all the contributing and some people do all the taking, very unfair to see someone work so hard get fleeced.

Mandelbrot exactly what we are considering...he is now thinking of selling the property. €1700 in management fees (if you pay upfront...€2000 otherwise) property tax, PRTB, PRSI the list goes on....
 
I didn't actually see that calculator before but it doesnt take into consideration management fees etc. As far as i know you dont have to pay tax on what you pay in management fees etc
 
In very simple terms, for any tax year add up the total rent and subtract the relevant legitimate expenses. The tax is calculated on the difference.
 
ok thanks Steiner and can you subtract PRTB and NPPR etc? what's a legit expense?
 
Maintenance, insurance, Mgt fees, repairs, capital allowances (12.5% of the value of fixtures, fittings, furniture, appliances etc), Agent fees, PRTB fees. Accountant fees. Mortgage interest (not relevant to your question)

Not allowable: NPPR, Property Tax (both are moot points-with conflicting arguments, but the NPPR is definitely out according to Revenue)

There is a guide to renting propery on revenue.ie.
 
pAnTs said:
well he is working for minimum wage and paying for a masters degree on 20 hours per week, thats working hard....he bought the apartment to try and earn some extra income to get ahead in life ... Seems to me like some people do all the contributing and some people do all the taking, very unfair to see someone work so hard get fleeced.
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Most people don't expect to be able to save while they are students. How is he being fleeced? He got the money for the property completely free, so even though he has to pay tax the income is still free money for which he has not personally invested a red cent. When he eventually has a decent full time job and is paying 50% of his total income over in tax, not to mention indirect taxes, he may think today's tax levels are pretty benign in retrospect.
 
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