# Will a new property tax be imposed on investment properties?



## Maggs065 (12 Nov 2010)

Hi,

Maybe the above is a naive question, but since we are already paying a property tax and tax on our investment property, will we also be subject to the proposed new tax?

If so, do you think this will reflect a rise in rental rates?

Cheers,
Maggs


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## TLC (12 Nov 2010)

I've wondered about this also, wouldn't be surprised if there was another tax imposed but I don't think that rent increases are an option.  We reduced the rent last year for our tenants & as long as it covers the mortgage & related charges we're happy enough.  Though how long this will continue - who knows.  We aren't major landlords just 1 property which I though would compensate for me not having a pension - stayed at home with the kids when they were small.  If we sold now (if it would even sell) we would be very lucky to clear the mortgage.  Still, it was our decision & we have to live with it.


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## mercman (12 Nov 2010)

I would say that a tax on Investment residential properties and Investment Commercial Properties will come into play. An easy and correct tax in my opinion, but then no doubt others will doubt this.


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## T McGibney (12 Nov 2010)

mercman said:


> I would say that a tax on Investment residential properties and Investment Commercial Properties will come into play. An easy and *correct tax* in my opinion, but then no doubt others will doubt this.



Do you mind me asking why you think so? 

I'm not a landlord myself but I see large numbers of commercial and residential landlords in serious financial difficulties and I'm dismayed that there seems to be an appetite out there to screw them to the wall altogether.


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## mercman (12 Nov 2010)

I do not believe that there is any desire to screw people to the wall altogether. However if a property tax had of being brought in around four years ago. it would have taken the heat out of the market. Property was a drug in this country and in the words of a High Court Judge, we all becamed property Junkies. Until the market has lost the unprofessionals in the market, both agents and purchasers and Financial Institutions, then the property market can rebuild itself. If placing a Tax means the start of a clean up, well and good. Otherwise there is nothing more pathetic than watching amateurs really screw a market and in this case persons that empty their pockets to satisfy the greed of others.


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## Maggs065 (12 Nov 2010)

TLC said:


> I've wondered about this also, wouldn't be surprised if there was another tax imposed but I don't think that rent increases are an option. We reduced the rent last year for our tenants & as long as it covers the mortgage & related charges we're happy enough.


 
Unfortunately I have to supplement my mortgage payment by €250/month. I've calculated that my 'investment' property costs up to €6000/year and am nervous about a new tax. 
I'm a reluctant landlord - having got married recently and moved in with my husband. I think there are alot of landlords like me out there that are renting out their former PPR.


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## TLC (12 Nov 2010)

Maggs065 - there are many people in your position, I think I stated why we became landlords - to give me some kind of money at retirement - so if I lose out it's because I was lulled into a false sense of security & obviously didn't know enough about the country/world economic factors which could come into play.  That's my fault - but I think we were all "guilty" of being naive.  It was all made so easy to borrow & I do really have sympathy for people like yourself who thought they were doing the prudent thing by buying a house before they were priced out of the market.  We live & learn I suppose - but do we really?  I'm concerned that if all the facts do not come out regarding what happened here it will all happen again. I'd agree with Mercman a property tax on rented property would have probably slowed down the market - along with other factors which could have been put into play - spilt milk!


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## T McGibney (12 Nov 2010)

mercman said:


> Until the market has lost the unprofessionals in the market, both agents and purchasers and Financial Institutions, then the property market can rebuild itself. If placing a Tax means the start of a clean up, well and good. Otherwise there is nothing more pathetic than watching amateurs really screw a market and in this case persons that empty their pockets to satisfy the greed of others.



You're entitled to your opinion, that said the above sounds a bit too Malthusian for my tastes. I'm not sure whether a modern democracy should seek to systematically engineer the financial impoverishment of a minority element of its population - especially as retrospective punishment for a supposed 'crime' that never existed in the first instance. 

The irony that the 'crime' in question was actively encouraged, facilitated and incentivised by the same State apparatus that now seeks to mete out this punishment (and has already started doing so) is beyond satire.


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## mercman (12 Nov 2010)

T McGibney said:


> The irony that the 'crime' in question was actively encouraged, facilitated and incentivised by the same State apparatus



Encouraged Yes, Incentivised (with tax incentive schemes) Yes, but not facilitated. The Banks did this in a completely reckless manner which if the Senior Management and Middle Maqnagement had of taken cognisance of what they were doing, it would have been stopped. Instead, the Bonuses were paid for crazy lending and allthough the loans have gone pear shaped, none of the bonuses have been recalled. But before we all get into a rhetoric about blaming the Government, does anyone really believe that the opposition would have done anything different -- Not in a month of Sundays.


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## Complainer (12 Nov 2010)

Expect the tax relief on mortgage interest to be reduced or eliminated. Maybe if they had listened to Bacon in the early part of the decade, the prices wouldn't have got so crazy.


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## DB74 (12 Nov 2010)

The time to tax landlords/investors is gone IMO - should have been done 5-6 years ago to discourage investors from buying.


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## T McGibney (12 Nov 2010)

mercman said:


> Encouraged Yes, Incentivised (with tax incentive schemes) Yes, but not facilitated. The Banks did this in a completely reckless manner which if the Senior Management and Middle Maqnagement had of taken cognisance of what they were doing, it would have been stopped. Instead, the Bonuses were paid for crazy lending and allthough the loans have gone pear shaped, none of the bonuses have been recalled. But before we all get into a rhetoric about blaming the Government, does anyone really believe that the opposition would have done anything different -- Not in a month of Sundays.



Facilitated?  -yes definitely, by the 'see no evil hear no evil' attitude of the State to the unsustainable credit boom, typified by the Financial Regulator, David Begg & friends on the Central Bank board and Bertie 'might as well commit suicide' Ahern.

Note that you are blaming the banks but now proposing to screw others (ie their customers) for the banks' misdeeds.


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## mercman (12 Nov 2010)

Well I would say screw the Banks but they are broke. Accordingly in a democracy you simply cannot have Government interfere is Private business or Enterprise. Maybe they should jump to the shouts of the non professional property owners and re introduce Rates, and this will then sort matters without gripe.


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## Luternau (12 Nov 2010)

Complainer said:


> Expect the tax relief on mortgage interest to be reduced or eliminated. Maybe if they had listened to Bacon in the early part of the decade, the prices wouldn't have got so crazy.



Why should one sector of business be singled out for special treatment on interest on loans for premises? If this is brought in it would be so as to increase the tax take -therefore should this approach not be applied to all businesses? It would appear as it is that restricting it to 75% is already unfair-when compared to other businesses with loans on premises. 
Surely this will lead to lots of defaults from landlords struggling? Just a point...


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## Complainer (12 Nov 2010)

Luternau said:


> Why should one sector of business be singled out for special treatment on interest on loans for premises?


Because people live in those premises. We're a society first, and an economy second. Housing is a critical service.



Luternau said:


> If this is brought in it would be so as to increase the tax take -therefore should this approach not be applied to all businesses? It would appear as it is that restricting it to 75% is already unfair-when compared to other businesses with loans on premises.


Certainly, relief on unlimited interest on interest-only property investments should be stopped, as this is simply a tax avoidance device.



Luternau said:


> Surely this will lead to lots of defaults from landlords struggling? Just a point...


Cutbacks in social welfare, public sector pay and increased taxation will all lead to additional defaults from struggling house-owners too. Do we defer these measures too, or are landlords expected to be immune?


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## T McGibney (15 Nov 2010)

Complainer said:


> Because people live in those premises. We're a society first, and an economy second. Housing is a critical service.



Indeed, but I can't fathom how the State's  imposition of special taxes and other charges on landlords is supposed to help their tenants. 

If a landlord goes bankrupt, has their property repossessed, or is forced to sell the property, their tenants will also suffer amid the ensuing disruption.  

The fact that one person's 'investment property' is another person's home is the precise reason why the State should tread very carefully.


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## Complainer (15 Nov 2010)

T McGibney said:


> Indeed, but I can't fathom how the State's  imposition of special taxes and other charges on landlords is supposed to help their tenants.


It is really a case of removing a relief rather than imposing a charge, though I understand the net effect is the same. In the long term, this will reduce the still-inflated property prices, which will be passed on to tenants as reduced rent.



T McGibney said:


> If a landlord goes bankrupt, has their property repossessed, or is forced to sell the property, their tenants will also suffer amid the ensuing disruption.


Indeed there is some disruption, though the impact on a tenant is fairly marginal. The longer term benefit to the tenant is reduced property and rental prices.


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## T McGibney (15 Nov 2010)

Being served with a notice of summary eviction from one's home within one month to facilitate vacant possession hardly counts as 'marginal disruption' for any tenant. In my view, any measure that erodes tenants' security of tenure is to be deplored.

Although JM Keynes once said 'in the long run we are all dead', you may be correct in concluding that higher landlord taxes will eventually help depress house prices and rents. 

That said, the last time such measures were tried (March 1998 to December 2001, following the Bacon Report) rents went through the roof, only to fall when these measures were scrapped in December 2001. Who was it said that the recipe for failure is doing the same thing again and again while expecting a different result?


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## Greta (15 Nov 2010)

T McGibney said:


> That said, the last time such measures were tried (March 1998 to December 2001, following the Bacon Report) rents went through the roof, only to fall when these measures were scrapped in December 2001.



That's not surprising - removing incentives/imposing taxes on landlords has the effect of reducing the supply of rental properties, which leads to increasing rents

Something like that is happening in Britain now, as it is simply too difficult for landlords to get a buy-to-let mortgage and a lot of landlords sold in the last year or so (those who didn't really want to be landlords, just couldn't sell their house, so had rented it instead). So those landlords that are still there are able to charge higher rents as a result.


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## Butter (17 Nov 2010)

I think it was Nationwide who said this week that 50% of investment property mortgages were in arrears.  If the amount of interest relief on mortgages is lowered again or a charge is added to the property this will drive more landlords into arrears.

Many people in this country thought that a property would become or enhance their pension.  Many private sector workers struggle to fund an adequate pension.  Most landlords who got into it for these reasons are not fatcats themselves but are just hoping they can hang on to their property and not default on the mortgage payments.  Being a landlord is not a crime or wrong - many people made an investment decision based on the tax rules and regulations at the time.  

If the government can change the rules on the amount of tax relief available on an investment property (which it has, and will probably do again) why can't they come along and say - all the tax relief you thought you were getting to fund your pension is wiped off the board.  Tough luck and you can trust nothing in this country.  It's a very bad precendent.


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## Lobby (18 Nov 2010)

First off, Ireland, like any economy, needs rental properties. 

Their provision is a commercial activity and as such should receive the same treatment as any other commercial activity.

The government already significantly taxes rental properties through the income tax system, most (nearly all) landlords will pay tax on their rental income through the PAYE system, in addition to any income they receive through their "day job". The fact that some landlords can avoid tax is a general poblem with the tax system and is not unique to landlords - some folk just have the wealth to be able to avoid tax, this should be addressed. 

There is one area where rental properties are not currently treated similar to other commercial entities, and that is commercial rates. Strictly speaking, they should be liable to commercial rates as would any other business in an area.


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## Complainer (18 Nov 2010)

Butter said:


> If the government can change the rules on the amount of tax relief available on an investment property (which it has, and will probably do again) why can't they come along and say - all the tax relief you thought you were getting to fund your pension is wiped off the board.  Tough luck and you can trust nothing in this country.  It's a very bad precendent.


I'd suggest that you can also expect a cut on pension tax relief - it probably won't be eliminated entirely, but it will probably be cut back to standard rate (20%).



Greta said:


> That's not surprising - removing incentives/imposing taxes on landlords has the effect of reducing the supply of rental properties, which leads to increasing rents


This simplistic analysis omits the important interrelationship between the rental market and the owner-occupier market. For every landlord that gets out of the business, that is one more property up for sale. It will either be purchased by another landlord (keeping the supply-side of the equation) or by an owner-occupier (reducing the demand-side of the equation).


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## Greta (19 Nov 2010)

Complainer said:


> For every landlord that gets out of the business, that is one more property up for sale. It will either be purchased by another landlord (keeping the supply-side of the equation) or by an owner-occupier (reducing the demand-side of the equation).



That's how it should be in theory but not how it has been, for some strange reason At least, this currently pops up in British press now and again - how rents are rising because there is a shortage of rental properties, many reluctant landlords having sold. Presumably they sold mostly to owner-occupies as buy-to-let mortgages are very hard to get and, if they sold to other landlords, the supply of rental properties would have stayed the same. So I don't know why the British rents are rising but they are Maybe these ex-rental properties were bought by those who had lived with their parents (thus saving a big enough deposit to buy in the current climate, where lenders demand big deposits), while those who rented continue to do so but there are fewer properties for them to rent? I don't know.


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## gearoidc (24 Nov 2010)

Having lured buyers into the investment property market with tax reliefs  and then withdrawing those reliefs, the state has  effectively created bank/tax slaves. They landlords will receive NONE of the rental income as it will be needed to pay the banks and the tax-man, the very ones who engineered the disaster in the first place.

It is a criminally unfair act and totally ruinous to recent entrants.

People such as Merc above, who take such delight in seeing landlords screwed in this way, seem happy to ignore the fact that 

a.these people already paid huge amounts of tax in stamp duty
b.that they pay income tax on their rental income profits.
c.that they have lost tens of thousands on their original purchase
d.that the vast majority are honest hard-working people who provide clean,well-specced, well-maintained properties and who treat their tenants fairly.

Why do you want this sector to be punished so badly???


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## mercman (24 Nov 2010)

gearoidc said:


> People such as Merc above, who take such delight in seeing landlords screwed in this way, seem happy to ignore the fact that



I presume you refer to me, and if so I ask you to respectfully excuse yourself. I think it poignant to ask you to refer to my posts and read them carefully. My business is the property business but I am unable to see any reason for excluding property in cut backs.

And your reference to landlords that keep clean, well specced, well maintained properties and that treat their tenants fairly, I do think you need to sit down and smell the coffee.


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## Complainer (24 Nov 2010)

gearoidc said:


> People such as Merc above, who take such delight in seeing landlords screwed in this way, seem happy to ignore the fact that
> 
> 
> b.that they pay income tax on their rental income profits.


If they are recent entrants to the market, they have no profit or maybe marginal profit thanks to our most-generous mortgage interest tax reliefs.


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## Bronte (25 Nov 2010)

mercman said:


> Instead, the Bonuses were paid for crazy lending and allthough the loans have gone pear shaped, none of the bonuses have been recalled.


 Did bank staff get a bonus for every mortgage on an investment property approved?

Also who do you classify as professional in the property market?


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## Bronte (25 Nov 2010)

Complainer said:


> Expect the tax relief on mortgage interest to be reduced or eliminated. Maybe if they had listened to Bacon in the early part of the decade, the prices wouldn't have got so crazy.


 
You know very well that Bacon has the opposite effect to that intended. You're always on the attack on landlords. In particular you're always on the attack to landlords who have interest only mortgages. Even though you full well know that they are mostly the one's in dire straights now. Can you imagine what abolising the relief will do to them. 

You and I had this very same discussion a long time ago if I recall correctly and it was debated to death. 

Why did they bring in Bacon and more importantly why did they abolish it. Oh yes that's right, it made property prices collapse and rents go up and less rental property available to tenant's restricting their choice and empowering landlords.


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## balmed out (25 Nov 2010)

Why do people always just blame government, banks and property developers. What about the fourth wheel of our reckless housing market. The house buyer and in particular those who bought multiple properties. They did so in order to make a profit and did so knowing that prices could fall as well as rise.


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## saintstephen (25 Nov 2010)

I certainly take responsibility for my decisions, however, I "invested" with the understanding that I would be working within a tax system that has now been turned on its head. 
Why not increase the CG tax or the rental income profit tax, IMO it would be much pore sustainable.
I believe it is unfair that now the rules are changing at a time when landlords are in dire straights.


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## balmed out (25 Nov 2010)

Well capital gains tax would threathen family business's and jobs as well as removing the incentive for people to try to grow businesses. A Profit on rental income is fair enough but rental income profit would surely bring in nothing. At the end of the day people had a choice whether or not to buy extra houses at ridiculous prices. Now everybody has to pay whether or not they decided to contribute to the problem by buying properties or not. Anyone who makes an investment has to realise its not risk free.


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## zxcvbnm (25 Nov 2010)

Folks,

Can someone answer me the following question which in my mind will settle this argument for once and for all.(kind of at least)

Firstly - can other businesses write off interest on business loans as an expense for tax purposes ?
If so, then i don't see any reason why property shoudl not be the same.WHich begs the question as to why it is reuced to 75% in the first place.

And even if other businesses cannot do this, I presume that other businesses must not pay a lump sum to the tax man to set up their business unlike the property investor who has to pay a lot of money in taxes upfront in the form of stamp duty.
This should certainly be taken into consideration.


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## balmed out (25 Nov 2010)

Dont see the relevance. Owning property is not a business its an asset, an investment.


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## zxcvbnm (25 Nov 2010)

balmed out said:


> Dont see the relevance. Owning property is not a business its an asset, an investment.



Owning property is not a business? Can you explain that one to me please? In what way is it not a business?

Of course it's a business. 

May I ask what are your criteria for being categorised as a business?

Getting back to my original question,can other businesses write off interest on business loans as an expense for tax purposes ?


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## T McGibney (26 Nov 2010)

zxcvbnm said:


> can other businesses write off interest on business loans as an expense for tax purposes ?



Yes, of course they can. This is a fundamental tenet of our tax system.


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## zxcvbnm (26 Nov 2010)

T McGibney said:


> Yes, of course they can. This is a fundamental tenet of our tax system.


 
Ok - I actually didn't know the answer to that.

Well - with that in mind, can someone explain to me why the same benefit should not apply for property investors? 

You can be sure that property investors have paid a hell of a lot more tax than a lot of other businesses. Granted, no one was forced to get into property.
Personally i spend €750k on new investment properties during the boom resulting in me handing over nearly €130k to the govenrment in stamp duty plus VAT charged on the properties.
And of course i did it by choice. I've no issue with that.
But that is one hell of a lot of money to give over in taxes. I feel i have more than paid my fair share when it comes to taxes paid with respect to property.

Reducing the interest to 75% was actually a sacandal.

The fundamental reason for any tax is that if someobody has surplus cash in their pocket that they should chip in a bit of it to society for communal reasons.
If you take away the interest relief for investors they won't have any surplus cash. i.e. they will have a negative cash flow.
And people are suggesting that they shoudl donate more cash even though they are in fact running a loss? Yes...let the rest of society conveniently gloss over the fact that there is no annual profit coming in but in fact large losses - but lets just get them to pay extra tax anyway. 

Like - Where is the fairness in that?
That is contrary to the fundamental basis of any tax system.

Seriously people - anyone who suggests that this interest relief shoudl be taken from property investors is not making any sense.
And it makes even less sense when they suggest it should *only* apply to property investors as opposed to other businesses. 

Like - where is the fairness in targetting someone due to the type of business they run.
A person shoudl be targetted for tax depending on how much money they make - not on how they make their money.

If a property investor is making a healthy surplus in income then of course tax him accordingly with income tax as normal.

As i said earlier - keep in mind that property investors have paid a hell of a lot more tax than most people through stamp duty and vat already.

If the gvernemnet is going to target specific busineses then property investors shoudl be last on their list.
Targetting property investors is nothing short of insane hysteria.

And the reality is the only reason the governemnt dropped it to 75% that time was because they succumbed to the pressure of the hysteria soorrounding anything to do with property at the time.

And lastly - who actually gains if you get rid of this tax relief? 
I can only speak for myself - but i am sure it applies to lots and lots of other property investors - but if that tax relief was taken away I would ha ve no choice but to default on my payments to the bank. I wouldn't even nearly be able to pay the extra cash.

In which case the banks would have to take the properies back,sell them at a much reduced price on teh open matrket, and realise that loss on their books.
In which case they would require further funding from the tax payer.

It's lose-lose for everyone involved and the government know that.


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## Complainer (26 Nov 2010)

Bronte said:


> Why did they bring in Bacon and more importantly why did they abolish it. Oh yes that's right, it made property prices collapse and rents go up and less rental property available to tenant's restricting their choice and empowering landlords.



So you're happy with the way house prices went after Bacon was abolished then?




zxcvbnm said:


> Ok - I actually didn't know the answer to that.
> 
> Well - with that in mind, can someone explain to me why the same benefit should not apply for property investors?


Because housing is a fundamental human need - because investors can/do make sure that they maximise their interest (and get the state to subsidise their mortgage on an ongoing basis) by never repaying capital, and keeping their own capital on deposit. It's just a financial engineering scam.


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## zxcvbnm (27 Nov 2010)

Complainer said:


> Because housing is a fundamental human need - because investors can/do make sure that they maximise their interest (and get the state to subsidise their mortgage on an ongoing basis) by never repaying capital, and keeping their own capital on deposit. It's just a financial engineering scam.



A valid point but in practice not relevant. 

The reality is most property investors don't have lump sums of cash lying in bank accounts for fun.
And banks are being far stricter these days insisting investors make capital repayments. 

And even if that was the case - which it isn't- then pro pert investors have given more than their fair share in taxes. As I said in my previous post, I paid over €130k in taxes for 2 properties totalling 750k. 
I really don't think the state can complain about their overall net gain in taxes due to property regardless of whether the very odd person is taking advantage of the tax relief.


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## Complainer (28 Nov 2010)

zxcvbnm said:


> The reality is most property investors don't have lump sums of cash lying in bank accounts for fun.


If the investor can't manage to repay the debt over a reasonable period (say 20 years), they really shouldn't be in the landlord business. Interest-only loans are gambling and speculating - and have led us into the bubble.



zxcvbnm said:


> And banks are being far stricter these days insisting investors make capital repayments.


Please don't tell me that, after all that's happened, you are prepared to put your trust into bank lending controls to keep down property inflation?



zxcvbnm said:


> And even if that was the case - which it isn't- then pro pert investors have given more than their fair share in taxes. As I said in my previous post, I paid over €130k in taxes for 2 properties totalling 750k.
> I really don't think the state can complain about their overall net gain in taxes due to property regardless of whether the very odd person is taking advantage of the tax relief.


It's a fairly simple principle - if you have the income, you pay the tax. PAYE payers don't get to whinge about all the PAYE they paid last year, or all the VAT they pay this year. The other taxes paid are irrelevant. If you have the income, you pay the tax.


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## zxcvbnm (28 Nov 2010)

As for your first point, the fact is that many if not most property investors cannot repay the debt over a 20 year period. 
That is the reality on the ground. That is the world we live in. As to whether they should or shouldn't have gotten involved in the first place is neither here nor there.  

As for your 2nd point, yes, banks are far stricter in trying to get capital repayments now from property investors.there are plenty of threads here on AAM. In fact,there was a big article in just last weeks Sunday business post you may have read how permanent tsb are calling in all capital repayments now by property investors irrespective of their finances. 

As for your third point, you are quite right in that if you have the income you pay the tax. However, if tax relief was taken away then property investors would be in negative cash flow each month and you think they should pay tax on this  income even though they are making a loss? Nonsense. 

This is contrary to the fundamental basis of any tax i.e. You pay out tax on any surplus cash you have after expenses.   

The only valid point you have made against this tax relief is that you think loads of property investors have loads of cash in various bank accounts making loads of interest thus taking advantage of this tax relief. 
It simply isn't happening. 

Bottom line is if it exists for other businesses then there is no logic whatsoever for property to be singled out for it to be abolished. 
As I stated in an earlier post, if you were to be singling out individual businesses for this relief to be abolished then in the interest of fairness,  property should be the last on the list given that property investors have given more than most in tax payments to the government.


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## Complainer (28 Nov 2010)

zxcvbnm said:


> As for your 2nd point, yes, banks are far stricter in trying to get capital repayments now from property investors.there are plenty of threads here on AAM. In fact,there was a big article in just last weeks Sunday business post you may have read how permanent tsb are calling in all capital repayments now by property investors irrespective of their finances.


You miss the point. The actions being taken by one bank today are irrelevant. My point is to ask if you really want to trust the banks to act in the best interests of society on an ongoing basis? I don't trust the banks. We need proper legislative controls.



zxcvbnm said:


> As for your third point, you are quite right in that if you have the income you pay the tax. However, if tax relief was taken away then property investors would be in negative cash flow each month and you think they should pay tax on this  income even though they are making a loss? Nonsense.
> 
> This is contrary to the fundamental basis of any tax i.e. You pay out tax on any surplus cash you have after expenses.


The question is whether interest-only is a legitimate expense. It's not. It is a tax avoidance advice, designed to maximise the interest paid, and therefore the state subsidy. It is not a legitimate expense.


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## shej (28 Nov 2010)

*Has the 75% relief been signalled for reduction in the 4 year plan?*

Just wondering has the current 75% interest relief been signalled for reduction in the 4 year plan?


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## Bronte (29 Nov 2010)

Complainer said:


> So you're happy with the way house prices went after Bacon was abolished then?
> 
> .


 
Bacon being abolished didn't create the property bubble.


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## Complainer (29 Nov 2010)

Bronte said:


> Bacon being abolished didn't create the property bubble.


It certainly wasn't the only cause, but it was right up there with a number of other bubbling policies.


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## zxcvbnm (29 Nov 2010)

shej said:


> Just wondering has the current 75% interest relief been signalled for reduction in the 4 year plan?


 
No - there is no talk of this being amended.

Although i do believe that labour want to change it. Although i also think that FG are against changing it.


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## T McGibney (29 Nov 2010)

Complainer said:


> It certainly wasn't the only cause, but it was right up there with a number of other bubbling policies.



The bubble was well and truly underway by the time the Bacon package was abolished. 

There is convincing evidence that the Bacon package actually fuelled the bubble between 1998 and the end of 2001, and subsequently, as it led to a spiralling of rents and abnormally high profits for landlords - especially those without mortgages. These abnormally high profits in turn fed the myths that (i) property investment was a no-brainer and (ii) properties would continue to rise in value ad infinitum. We all know where that led...


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## zxcvbnm (29 Nov 2010)

Complainer said:


> The question is whether interest-only is a legitimate expense. It's not. It is a tax avoidance advice, designed to maximise the interest paid, and therefore the state subsidy. It is not a legitimate expense.


 
OK - we're not gonna agree here it seems.

But suffice to say, byu your own admission you're only reason for getting this abolished is because you say it unfairly facilitates the investor who wants to take advantrage of the relief by allowing them save loads of their other cash in different accounts this unfairly taking advantage of this relief.

You're right - it does allow someone do this should they wish.
However - so few people are in a position to do it it is negligible in the extreme.
Hardly reasonable to abolish it for everyone else who have paid significant amount of property taxes already.

You may say that it is also unreasonable to expect the state to cover it instead.
Your comment of what other property taxes people have paid previously should be disregrded is also very unfair and would seem at odds with most peoples sentiments.

For example,it is for this very reason why people who have paid stamp duty are exempt from paying this new property tax for a number of years (7 years i think). (i.e. previous taxes paid are indeed considered relevant)
Everyone seems in agreement that this is equitable.


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## gearoidc (30 Nov 2010)

Complainer,

The terms under which people could invest in property were set by the State. As I have said already, they "lured" people in.
To then shut the door behind them, and change the rules of the game is immoral. No other word describes it. 
You have still not given a proper explanation why landlords should go to the hassle and expense of providing accommodation if they cannot write off their expenses.


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## Complainer (30 Nov 2010)

zxcvbnm said:


> OK - we're not gonna agree here it seems.
> 
> But suffice to say, byu your own admission you're only reason for getting this abolished is because you say it unfairly facilitates the investor who wants to take advantrage of the relief by allowing them save loads of their other cash in different accounts this unfairly taking advantage of this relief.
> 
> ...


I'd love to see some data to support your claim that 'few people are in a position to do it'. Certainly, recent purchasers of residential property will be struggling, but I suspect there an awful lot of landlords whose mortgages are older and at modest levels, but are still maximising their interest to avail of the state subsidy.

We need to have the right policies in place, regardless of whether we are in a boom or a bust mode.



zxcvbnm said:


> You may say that it is also unreasonable to expect the state to cover it instead.
> Your comment of what other property taxes people have paid previously should be disregrded is also very unfair and would seem at odds with most peoples sentiments.
> 
> For example,it is for this very reason why people who have paid stamp duty are exempt from paying this new property tax for a number of years (7 years i think). (i.e. previous taxes paid are indeed considered relevant)
> Everyone seems in agreement that this is equitable.



I'd wondering where you picked up 'most people's sentiments' and 'everyone's agreement' - was this at the Landlord society meeting? I'm not so sure at all that society as a whole wants to continue to subsidise landlords, given our extreme conditions.




gearoidc said:


> Complainer,
> 
> The terms under which people could invest in property were set by the State. As I have said already, they "lured" people in.
> To then shut the door behind them, and change the rules of the game is immoral. No other word describes it.
> You have still not given a proper explanation why landlords should go to the hassle and expense of providing accommodation if they cannot write off their expenses.


You could make exactly the same arguement about public sector salaries, or AIB shares or whatever - that the stated 'lured' people in. We are in drastic times, and we need to cut back. Landlords should be taking their fair share of the pain.


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## T McGibney (30 Nov 2010)

Complainer said:


> Landlords should be taking their fair share of the pain.



Singling out one particular sector for unashamedly punitive tax charges is the exact opposite of ensuring that those in that sector 'are taking their fair share of the pain' in line with other sectors that are not subject to such punishment.

In relation to interest-only mortgages, I've argued for years that they are very very bad news all round - for investors, for banks and for society. Had they been banned years ago, the country and many individual citizens would not now be facing ruin.

I still believe that they should be banned for new borrowings, and phased out over a finite timescale for existing borrowers. That said this is an issue for banking regulation and not the tax system, as the latter is too blunt an instrument to be used in order to implement such radical change.


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## zxcvbnm (30 Nov 2010)

Complainer said:


> Landlords should be taking their fair share of the pain.


 
That's a nonsense statement.
Landlords have paid out far far more in taxes than pretty much anyone else in business as far as taxes payable to get involved in that business.

You are seriously approaching this with a complete biased view.

As i said already in a previous post, if you want to single out one business above another business for not 'taking their fair share of pain', then landlords shoudl be the last on their list.

As i said - I paid out €130k between stamp duty and VAT on 2 properties totalling €750k.
And of course i did it by choice. I have no problem with that.

But for someone to come along and say they are going to single out the business I am involved in - instead of the many other businesses out there - because I have yet to 'take my fair share of the pain' is tripe, plain and simple.
Name me one other business out there with comparable taxes that need paying as entry costs.

You clearly seem to have some agenda here and are determined on selecting whatever bit you want to suit that agenda.
Focussing in on the tiny amount of property investors that store these hordes of cash that you seem to think they have to take advantage of this tax relief (while conveiently ignoring the massive entry costs paid to the exchequer due to taxes) is an example of the blinkers you have on.


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## gearoidc (30 Nov 2010)

Complainer said:


> I'd love to see some data to support your claim that 'few people are in a position to do it'. Certainly, recent purchasers of residential property will be struggling, but I suspect there an awful lot of landlords whose mortgages are older and at modest levels, but are still maximising their interest to avail of the state subsidy.



Complainer,
Don't you see the irony in your post?
You ask for "data" and then in the same breath talk about "suspecting" what "an awful lot of landlords" are up to.

Have you any "data" to support your suspicions or are they simply a manifestation of your obvious prejudice against landlords? (By the way, your suggestion that landlord's need to take their share of the pain is off the scale in its ignorance of the facts)

And what exactly do you mean by "maximising" their interest?
How does one "maximise" one's interest???


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