Tax Treatment of Landlords has to be Revisited

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azerty said:
While "hoping " that the government sees that some policies need to change to keep private LL. I think they should clarify quickly what is their stance on the eviction ban and its extension. Over the past decade, only a couple of rented apartments were sold in the tiny block near me with about 20 apartments. 3 were sold last year and I know of 3 that are planned for sale this year (it's January!)
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My sense is that it will be extended. The government have painted themselves into a corner. There is a wave of pre-ban evictions waiting to happen and more eviction notices issued during the ban period. To the extent these tenants are HAP tenants, they will not find somewhere else to rent (Threshold etc. now talking about the 'collapse' of the HAP system). Other landlords who were on the fence or not thinking about evicting will now be decide to evict. In order to prevent this they will extend the ban.

Doing that is only digging a bigger hole for themselves and kicking the can down the road, but I think that they will take these easier option rather than have to deal with a huge wave of homeless tenants. They may hope that the right to housing will be added to the Constitution and that will allow them to make the ban permanent.

My view on it and I hope that I am wrong

Keep in mind also that the 'temporary' RPZs originally for Cork and Dublin are now permanent and cover 75% of the country
 
Yes that is also my "sense"...
So now, I am trying to decide where I stand! Never thought about selling but now I do. It is ready to go to the market. I just have no clue what I will do after selling.
 
Mocame said:
Agree 100% PebbleBeach2020. RPZs have been a disaster in Ireland and if you look at estate agents reports on where landlords are selling up it is overwhelmingly in cities that are subject to RPZs.

Rent controls have proved disastrous everywhere they have been introduced. A friend recently moved to Sweden with his young family. He bought a house but has been advised to put his nine year old son's name on a waiting list to rent a private flat in Stockholm so he will have one by the time he starts university. Yes folks there is a ten year waiting list for private rented dwellings in Stockholm. There is also a massive black market in private rentals to rent controls are ignored in in this case. Classic insider/ outsider system.
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There is so much of a problem in accessing private rentals in Stockholm that money changes hands to "buy" access, even though it was made illegal, it continues to happen anyway.
Similar here with RPZs - i did very well out of it, by the time I left it, a 650pcm 1 bed north county Dublin rental had risen only to 764pcm, leaving me considerable scope for saving. But even after about 3 or 4 years, the impact was heavy. It also means you effectively cannot move, because of the financial value of the controlled rent. In my estimation the RPZ "value" to me was about 4k per year in 2017 and easily 6k pa by the time I left.
The problem is that it becomes an insider-outsider system very quickly as vacancies diminish. And we are only 7 years in - by 2026 the situation will be far worse unless there is a large injection of social housing AND cost rentals, and even then, these will largely benefit those "in the know."
 
Greenbook said:
That is correct, that is exactly what I was saying. I don't think the Revenue have a strong technical argument, but it is their best bet if the Min for Finance insisted they try to tax the RPZ benefit. From a policy perspective, it won't happen, so it is academic.
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You cannot, because you would need to gather evidence over years, and match that against the market rent for that property type in that area retrospectively.
In practice there has never even been a consistent pricing regime for rentals - I recall back in 2007 friends who had purpose built 2 bed apartments in Cork for 500pcm when I was renting an absolute dump of a legacy conversion into a studio for 630pcm.
 
Boyddbookman said:
To give some context to my original question concerning taxation :

I have a BTL property which had a long term tenant in situ. As a result of deciding to sell this property we issued the relevant notice of termination and the tenant subsequently left. We performed a cosmetic refurb and put the property on the market for sale, but the bids received are substantially short of the sales agent’s estimated valuation.

I do not wish to re-let this property (for reasons outlined previously) but was considering licensing occupation to my niece who is a student looking for suitable accommodation (stayed with us for the past two years, but now wishes to have her own independence).

The benefit is that the property would be occupied and will ensure the building insurance policy remains valid (property cannot be vacant for a 30 day period in any 12 month period). The license amount would be nominal, i.e. €10 per month, but I was concerned that this benefit may give rise to an unintended tax obligation for her/me.

This scenario then made me question how tenants who are benefiting from significant reductions in rent due to RPZs are treated.
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There was advice on this in Irish Times recently - https://www.irishtimes.com/your-mon...akes-sense-to-let-daughter-stay-in-apartment/. She would most certainly be liable for gift tax if the nominal value of the rental exceeded the annual threshold.
Easy way around this is to rent it to the niece at the same rent your last tenant paid. Unfortunately since you didn't sell, technically the original tenant would be entitled to return at the original rent, so I'd go ahead and just charge her same as last tenant or something close to it.

Alternatively you could also spend more on the refurb - buyers quickly spot a "cosmetic" refurb & set their expectations accordingly. You could take advantage of SEAI grants to perform a bigger upgrade which buyers will appreciate. Buyers care far more about the structure and efficiency than they do about the cosmetic details. But estate agents can and do overestimate the likely sales value so unless you are going to lose money, I'd consider the bids they are offering. It is money in your hand.
 
azerty said:
While "hoping " that the government sees that some policies need to change to keep private LL. I think they should clarify quickly what is their stance on the eviction ban and its extension. Over the past decade, only a couple of rented apartments were sold in the tiny block near me with about 20 apartments. 3 were sold last year and I know of 3 that are planned for sale this year (it's January!)
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They can't really, because it would be politically explosive 1-2 years out from an election given the circumstances. I would expect it to remain in place until then and possibly indefinitely. They might tweak it to allow people who don't have other properties to evict to move back in themselves, but other than that can't see it change.
 
lff12 said:
There was advice on this in Irish Times recently - https://www.irishtimes.com/your-mon...akes-sense-to-let-daughter-stay-in-apartment/. She would most certainly be liable for gift tax if the nominal value of the rental exceeded the annual threshold.
Easy way around this is to rent it to the niece at the same rent your last tenant paid. Unfortunately since you didn't sell, technically the original tenant would be entitled to return at the original rent, so I'd go ahead and just charge her same as last tenant or something close to it.

Alternatively you could also spend more on the refurb - buyers quickly spot a "cosmetic" refurb & set their expectations accordingly. You could take advantage of SEAI grants to perform a bigger upgrade which buyers will appreciate. Buyers care far more about the structure and efficiency than they do about the cosmetic details. But estate agents can and do overestimate the likely sales value so unless you are going to lose money, I'd consider the bids they are offering. It is money in your hand.
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Thank you Iff12, appreciate your reply.

A cosmetic refurb was all that was required for this particular property (we have bought and sold about 4-5 properties in the same locale over the past 10 years, so would have a reasonable idea what was required, although... we don't always get it right :))
This particular property already has a BER of C1. Personally, I think the retorspective energy refit is simply a nonesense from a financial perspective for BTLs. We are following the EPC murmurings in the UK at the moment (minimum performance thresholds to be raised to a C for BTLs) which will be replicated in Ireland once they have been established in the UK. We are currently selling our small portfolio of BTLs here in Ireland and actively looking to re-invest (and most likely to move) abroad instead.

Yes, its the risk of an unintended tax burden arising that we are cocnerned about. Since my last post, due to the fact we have another 3 active insurance policies with this particular insurer, we were able to negotiate a more limited (constrained) insurance cover for this particular property for the next 3 months, so fingers crossed we won't need to draw upon it. Fortunately, that negates some of the risk exposure we were concerned about earlier this week. However, as our ex-tenant is resettled in their new accomodation thankfully it just does not make sense as to why we cannot utilise the empty property for alternate purposes without having to worry about the wrath of the RTB. The legislative and RTB model in Ireland is not fit for purpose. Not that we had doubts, but this just reaffirms our previous decision to sell up and re-invest elsewhere.

Thanks again Iff12
 
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I see Sinn Fein in the dail today. Throwing mud as usual. They are looking for

1. Ban rent increases for 3 years

2. One month's rent back into renters pockets

3. Extend eviction ban to year end.

How has no one called them out. Its puzzling. Do they see the mass exodus from landlords???
 
It isn't just SF. Labour, Soc Dems, PBP are in favour of the above.

FG/FF/Greens are in favour of the third point from what I can see. The eviction ban is absolutely going to be extended. How can they not do it?!

Point 1, they allow 2% a year now but that's basically a freeze. Inflation is 8% plus. Interest rates going through the roof. Costs up. Landlords profit eroded. That's why they are leaving in huge numbers.

And yet no politician has come out and said that. And they wont. It's not about taking sides. It's about solving the problem.

The RPZ don't help solve it.
The tenancies of indefinite duration don't help.
The threat of rent freezes dont help.
The threat of a three year eviction ban don't help.
Tax rates of 52% don't help.

I can't think of anything or practical and universal that the government have done to entice and motivate landlords to stay in the sector and others to invest in it also. Nothing.
 
That ship has sailed along with hundreds/thousands of properties. Tired hearing about it now, no doubt if they ever get round to it there will be so many conditions attached as to be unusable.

If we had a competent Minister who actually spent 5 mins familiarising himself with the tax treatment for Landlords then we wouldn't be where we are now.
As a FG member I'm actually wondering how much worse SF could be compared to the utter bags FG have made.
 
Knuttell said:
If we had a competent Minister who actually spent 5 mins familiarising himself with the tax treatment for Landlords then we wouldn't be where we are now.
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There is a big and unfortunate gap and siloed thinking from government:

  1. Department of Housing & RTB don't understand tax treatment at all and just regulate, regulate, regulate;
  2. DoF/Revenue don't want to carve out a separate tax category for rental rental income, nor CGT deductions for rental properties. This was made very clear in last year's TSG papers. Rental profits are just one part of a big tax base and they don't see a point in gentler treatment for landlords;
  3. Department of Social Protection doesn't want to give up its 4% Class S or Class K PRSI on "unearned income" either.

Michael Noonan in 2011 was the last minister with a strategic eye in this regard. His seven-year CGT exemption for properties held as rental put a floor on a collapsing market, cost nothing up front, and got cash buyers back into residential property. The expiry and non-replacement of this CGT measure since 2018 is a big part of the current market exodus.
 
Knuttell said:
If we had a competent Minister who actually spent 5 mins familiarising himself with the tax treatment for Landlords then we wouldn't be where we are now.
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Many TDs, including the current housing minister have registered interests as landlords or did so in recent years. It isn't a familiarity issue, it's a getting re-elected issue. The voting public does not always favour pragmatism or practicality in the face of issues like this.
 
Knuttell said:
If we had a competent Minister who actually spent 5 mins familiarising himself with the tax treatment for Landlords then we wouldn't be where we are now.
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The new Finance Minister is a Chartered Accountant. There's not a doubt in the world that he's fully aware of all the issues. The chances of him doing anything concrete to fix them are generally counted around zero.
 
Not talking about Fin Minister, its the Minister for housing, Daragh O Brien. who recently talked about considering giving landlords a tax break on White goods....something we already have....that tells you straight away he hasn't a scooby.
 
It's much easier to blame the LLs than to recognize that the current policies are making things worst. The language of politicians and media have become more and more agressive towards landlords.
 
Some good points made on Upfront Monday night , could do something similar to the agri sector where tenants get a five year lease , while landlord gets tax free income / lower taxed income.
Michael McDowell also addresses the exodus of landlords in the Irish Times today. Government obviously don’t care about small landlords & neither do Sinn Fein. They want to get large scale supply up via REIT’s and large scale pre- funding schemes. Problem is will these funds continue to build in high inflationary / rising interest rate environment & will appetite of funds continue to exist when other less risky higher yielding / less market risk alternatives exist
 
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