The Journal are reporting that Leo Varadkar stated at a party meeting in Wicklow yesterday evening that "he would like to impose a property tax on vacant properties in high demand areas, while discussing the “punitive costs” landlords experience, stating they should be treated like any other business and permitted to offset any loss".
Varadkar proposes a tax on empty buildings
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T McGibney
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Politician in speaking out of both sides of his mouth shocker.
In principle, I wouldn't have a particular problem with a vacant dwelling levy, although it would be very difficult to frame and police. Of course, it would be unnecessary if we had introduced a proper site value tax instead of the LPT in the first place.
In any event, it surely has to be positive that the unfair tax treatment of residential letting profits is on the political agenda. No?
In any event, it surely has to be positive that the unfair tax treatment of residential letting profits is on the political agenda. No?
The Horseman
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We will wait and see if the tax treatment does indeed change. I would have a problem with a vacant dwelling levy. it is bad enough that you are liable for property tax.
We need to treat residential landlords as a business rather than the social agenda. it is a business pure and simple and should be treated as any other business. What's next because I choose to use public transport and leave my car in my driveway should I be charged a tax for not using my car although I already pay car tax.
We need to treat residential landlords as a business rather than the social agenda. it is a business pure and simple and should be treated as any other business. What's next because I choose to use public transport and leave my car in my driveway should I be charged a tax for not using my car although I already pay car tax.
I don't think there's a shortage of cars in the country whereas there is a dire need for housing.
I know of a house near me in an area of Dublin close to town. It's been empty 3 years since the landlord asked the Phillipino family there to move out after they had the temerity to ask for some new furniture (they lived there 3 years without any issues and the furniture was in bits when they moved in). Landlord said he wanted the gaff for an extended family member who hasn't appeared yet!
I was talking to that landlord last Summer who was looking for info about some of the neighbours off of me. I asked about their own gaff and they said they were going to sell it...but it's still empty today.
I just think they are wealthy enough to not be bothered with tenants and the issues that come with being a landlord. They're also tight enough to not want an agency to manage it for them.
They should be taxed into making a decision one way or another
It is a popular notion that rental income is not treated the same as any other business, but it is not entirely true.
If you borrow money to buy shares, the interest cost is not tax deductible. The reasoning being that you should not get a tax break to acquire an asset.
If you are engaged in a business and borrow money to buy an asset for use in the business, say a van, the interest cost is tax deductible. The interest cost being seen as similar to any other operating cost.
The distinction is that vans have a limited lifetime, they are used up in the business, (in fact if they are not used up and are sold a balancing charge applies).
A property is not used up in the business. Shares still exist after any loan is paid off.
The law seeks to support business and the creation of capital, it does not seek to support the purchase of existing capital.
The Horseman
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Land and buildings in a business perspective are treated differently. There is no depreciation charge for land there is however a deprecation charge for buildings. Properties purchased for business are normally depreciated over a 25 yr life span.
From a business perspective the tax on rental income should be charged on a fig net of a depreciation charge for the property (not the land element) in the same way it is in a business perspective.
Like any business if there is a capital appreciation on a property be it a residential property or business property within the business environment then the Capital Gains will be charged on its disposal.
From a business perspective the tax on rental income should be charged on a fig net of a depreciation charge for the property (not the land element) in the same way it is in a business perspective.
Like any business if there is a capital appreciation on a property be it a residential property or business property within the business environment then the Capital Gains will be charged on its disposal.
T McGibney
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No tax policy should ever be based on such sweeping and ill-informed generalisations.
Not for tax purposes they ain't.
The Horseman
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Depreciation is a deductible expense in arriving at taxable income.
T McGibney
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Not of almost all buildings it ain't
It is entirely true!
The taxation of residential letting income is subject to a separate and differentiated tax regime to any other trading business. Different rules apply with regard to allowable deductions, capital allowances and the treatment of losses.
Contrast with the tax treatment of a short-term letting business/B&B/hotel.
There is no logical reason why the tax treatment should be any different - it's purely a quirk of history.
The Horseman
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I am interested in your understanding of what elements of the buildings are not allowed be depreciated (assuming the business owns the property and is not leasing same) and are therefore not deductible from income to arrive at taxable income.
T McGibney
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(shakes head)
The tax treatment of buildings used in a business is very basic stuff.
Apart from designated qualifying industrial buildings and farm buildings, and occasional temporary incentives over the years for hotels etc, there are no capital allowances for such buildings.
It wasn't a generalisation. It was a specific example of a house being left empty in a sought after area of Dublin for 3+ years and for no good reason. And I'm sure there's many many more like that around Dublin and the other cities in Ireland.
The lack of a real stick in current tax policy allows for that.
Anyways, this is off topic as such. So I apologise for that
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T McGibney
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~200,000 empty properties across the state according to official figures. For many, the onerous responsibilities and risks are good enough reason not to get into the letting game.
Rather than taking the stick approach (which no doubt they'd mess up anyway), we need to understand why the carrot isn't attractive enough, or in many cases the short-term let or Airbnb markets are so much more attractive. What other line of business faces a taxation stick should they choose not to make their products available?
The Horseman
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The carrot isn't attractive for two reasons. The tax treatment of the landlords and the unwillingness of the state via the RTB to deal with troublesome tenants. I am conscious this thread relates to the tax aspect so will focus on that issue.
The Govt has by introducing the rent caps and the tax treatment of landlords is discouraging investment in residential buy to lets. If it is so easy and profitable being a landlord why are so many small landlords leaving the sector.
Maybe by working in consultation with the landlords and their representative bodies a joint approach to dealing with the issue might be beneficial for all stakeholders rather than none of them.
The Govt has by introducing the rent caps and the tax treatment of landlords is discouraging investment in residential buy to lets. If it is so easy and profitable being a landlord why are so many small landlords leaving the sector.
Maybe by working in consultation with the landlords and their representative bodies a joint approach to dealing with the issue might be beneficial for all stakeholders rather than none of them.
The Horseman
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The tax treatment of buildings used in a business is very basic stuff.
Apart from designated qualifying industrial buildings and farm buildings, and occasional temporary incentives over the years for hotels etc, there are no capital allowances for such buildings.[/QUOTE]
I am aware of the Capital nature of tax and the various incentives offered over recent times. The question I asked is about the depreciation charge and its affect on taxable income (Rental income) not the tax on disposal etc.
Apart from designated qualifying industrial buildings and farm buildings, and occasional temporary incentives over the years for hotels etc, there are no capital allowances for such buildings.[/QUOTE]
I am aware of the Capital nature of tax and the various incentives offered over recent times. The question I asked is about the depreciation charge and its affect on taxable income (Rental income) not the tax on disposal etc.
T McGibney
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The depreciation allowance for income tax and corporation tax purposes (technically termed capital allowances or the wear and tear allowance) is restricted generally to plant and machinery, equipment, fittings and vehicles.
In respect specifically to income tax as it applies to rental income, it is restricted to fittings, eg furniture, fittings such as white goods and contents provided in the property by the landlord.