# Expenses offset against rental income within 1 tax year



## tecate (15 Jul 2018)

As per the thread title, is there a list anywhere of the types of typical expenses that could be claimed against tax on rental income incurred within one tax year?

I seem to vaguely recall that with certain types of expenditure on a property, they can only be offset over a number of years.  Is that correct?

How are things like new furnishings, house painting or relatively minor home improvements treated?

I'm just renting my home out for a one year period and with that, I'm trying to be as tax efficient as possible (i.e. not Evade tax but to avoid/minimise taxes within the rules of the system that is in place).  The rental income is pretty modest but given that mortgage payments can't be offset, I'd sooner stump up expenditure on the house instead of shelling it out in tax.


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## Bronte (16 Jul 2018)

Furniture is wear and tear. So over 8 years. Painting is just a normal expense.  Can you list the expenses. Figures are always a good idea on here too. You can’t deduct prior to rental expenses. Mortgage interest is deductible too. There are loads of similar threads on here on this subject.


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## tecate (18 Jul 2018)

Bronte said:


> Furniture is wear and tear. So over 8 years. Painting is just a normal expense.  Can you list the expenses.


I guess furniture is out then as I'm just letting for one year....so offset over 8 years doesn't really do a lot in that instance.  About to get the house painted so at least that can be used to offset.
Other than that, I don't have anything in the way of expenses to offset.  Was planning on upping the expenditure on things that I might get some value out of myself when I move back in ...but it seems that most of these are covered under wear and tear and so, the offset diluted over 8 years. 

Mortgage on a tracker so paying little in the way of interest (which naturally I'm chuffed about but not really helpful in this instance).  Insurance and PRTB fee I suppose are the only other things that I can think of.


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## mathepac (18 Jul 2018)

Have you told your lender that you are converting your home into an investment property?


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## Zenith63 (18 Jul 2018)

mathepac said:


> Have you told your lender that you are converting your home into an investment property?


What are the implications of not informing the lender out of interest?  Asking for a friend .


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## tecate (18 Jul 2018)

mathepac said:


> Have you told your lender that you are converting your home into an investment property?


We're going off topic here but you *know* the answer to that!  Furthermore, it's hardly a strategic choice I made (and you are aware I said it was for a period of one year - so it's also not a permanent switch of property classification).  Are you saying you would?  Whats to be gained from that disclosure?  It's often been speculated in the past that banks may use the opportunity to pull the tracker.  I've not been tuned in to any such circumstances arising in the interim....but perhaps you have some info to impart in that regard..


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## Bronte (18 Jul 2018)

There is no need to inform the bank. Don't open that can.  When are you painting the property?  But do inform the house insurance company that the property is going to be let. 

Yes PRTB, insurance are expenses. 

Seems odd to be only letting for one year and then deciding to put in expensive stuff.  How do you know you'll have an easy job the tenant leaving after a year.  Good luck with that in today's overheated market.


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## tecate (18 Jul 2018)

Bronte said:


> There is no need to inform the bank. Don't open that can.


Absolutely - nothing good can come from that.


Bronte said:


> When are you painting the property?


I'm away but have someone meeting a painter this evening to quote for the work.


Bronte said:


> But do inform the house insurance company that the property is going to be let.


I never got round to this originally (for the first couple of months) which I know was foolish...but renewed insurance to reflect a rental property.


Bronte said:


> Seems odd to be only letting for one year and then deciding to put in expensive stuff.  How do you know you'll have an easy job the tenant leaving after a year.  Good luck with that in today's overheated market.


I'm not sure I understand?  I have a 1 year fixed contract with the tenant - and tenant is a sibling of my next door neighbour..so not expecting any problems there.  As regards the expensive stuff, if it would offset tax, then yes, I'd do that - but it doesn't seem like that idea works (as most items I can think of would probably fall under that 8 year offset palaver)....unless someone has any thoughts on appropriate items?


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## T McGibney (18 Jul 2018)

tecate said:


> As regards the expensive stuff, if it would offset tax, then yes, I'd do that



Incurring overheads don't offset tax. Overheads merely attract a deduction against taxable profits. So you spend €100 to recoup a tax saving of 20%/40%/whatever. That's why it never makes sense to break your own windows to attract tax relief on repairing them.


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## tecate (18 Jul 2018)

T McGibney said:


> Incurring overheads don't offset tax. Overheads merely attract a deduction against taxable profits. So you spend €100 to recoup a tax saving of 20%/40%/whatever. That's why it never makes sense to break your own windows to attract tax relief on repairing them.


Indeed...although you do remind me of that one window thats had a crack in it and hasn't been repaired the last couple of years - I'll add that to the list.  Sometimes, such an offset can provide the extra motivation to get stuff like that taken care of.

As regards breaking my own windows, naturally enough doesn't bring me any further forward.  The use and benefit of something going forward - then sure.  For example, painting is classed as maintenance but I'll derive the benefit of that for a number of years.  If there are other items of a similar nature, I'd be foolish not to seek to do them right now..


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## T McGibney (18 Jul 2018)

tecate said:


> If there are other items of a similar nature, I'd be foolish not to seek to do them right now..



Just be careful, if the amount of repairs and maintenance expenditure appears disproportionate or out of kilter with the rental income you earn, it may attract Revenue attention and they may disallow some or all of it.


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## Sophrosyne (18 Jul 2018)

As Bronte previouly said be aware that, with few exceptions, expenses incurred (including painting) before the property is let cannot be offset against rental income.


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## Bronte (18 Jul 2018)

T McGibney said:


> Just be careful, if the amount of repairs and maintenance expenditure appears disproportionate or out of kilter with the rental income you earn, it may attract Revenue attention and they may disallow some or all of it.



I'm already seeing red flashing lights with this one.  And who paints a property mid way through a one year tenancy.


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## Bronte (18 Jul 2018)

tecate said:


> I'm not sure I understand?  I have a 1 year fixed contract with the tenant - and tenant is a sibling of my next door neighbour..so not expecting any problems there.



Delighted you've a contract. In two decades I've never had one. Why. Pointless is why.  But you do have a good chance with the relationship angle, until they move in the girlfriend, split up, and girlfriend moves in boyfriend 2.  LOL.


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## tecate (18 Jul 2018)

Bronte said:


> I'm already seeing red flashing lights with this one.  And who paints a property mid way through a one year tenancy.


The house was let in a rush.  It had not been painted externally for many years as there was a back and forth with an insurer over a structural liability issue (which has since been settled). It looks terrible and we did actually say to the tenant that we intended to paint it (although he's pretty laid back and hasn't made any issue of it).


Bronte said:


> Delighted you've a contract. In two decades I've never had one. Why. Pointless is why.  But you do have a good chance with the relationship angle, until they move in the girlfriend, split up, and girlfriend moves in boyfriend 2.  LOL.


You'll have to forgive my ignorance on this.  I'm an accidental landlord whereas I'd imagine you have years of experience.  Is a fixed term tenancy agreement not worth the paper it's written on??  I was vaguely aware of protections for landlords being woeful but thought that a fixed term tenancy stands up?


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## mathepac (18 Jul 2018)

Zenith63 said:


> What are the implications of not informing the lender out of interest?  Asking for a friend .


 Potential loss of tracker is the obvious one.


tecate said:


> We're going off topic here but you *know* the answer to that!  Furthermore, it's hardly a strategic choice I made (and you are aware I said it was for a period of one year - so it's also not a permanent switch of property classification).  Are you saying you would?  Whats to be gained from that disclosure?  It's often been speculated in the past that banks may use the opportunity to pull the tracker.  I've not been tuned in to any such circumstances arising in the interim....but perhaps you have some info to impart in that regard..


Not off topic in the least.

You are seeking input as to how to get the tax-payer to partially fund re-decorating and repairing your rental property. That's fine but the other side of the equation is that you have a contract with your lender for a preferential mortgage rate which probably precludes your use of the property as a rental. You know what your contract with the lender states, I don't naturally, but your reaction suggests I might have struck a nerve.

I suppose all I can hope for is that the lender scours the 'on-line PRTB' registrations looking for properties they hold the loans for.



Bronte said:


> There is no need to inform the bank. Don't open that can.


Of course there is, if only to check the OP is not in breach of contract


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## Zenith63 (18 Jul 2018)

mathepac said:


> Potential loss of tracker is the obvious one.


Sure, but I assumed the way you phrased it there was some negative implication to not informing them, like it breaks a covenant and allows them seize the property and you forfeit your payments or something like that .


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## T McGibney (18 Jul 2018)

tecate said:


> @mathepac  It's got nothing to do with minimising the tax liability on the rental.


Ah come on.

Your first post said:


tecate said:


> I'd sooner stump up expenditure on the house instead of shelling it out in tax.


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## tecate (18 Jul 2018)

T McGibney said:


> Ah come on.
> 
> Your first post said:


Are we reading the same stuff or not?  Mathepac went on a solo run about whether I had informed my lender that I had rented out the property.  That's got nothing to do with my query.

As regards what you've just quoted, of course I'm looking to minimise my tax liability within the rules of the framework that's there.  Wheres the misunderstanding??


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## T McGibney (18 Jul 2018)

Ok, sorry, I see your point now.  

Some of the ideas you've mentioned (eg claiming tax deduction on repair of longtime defects) are in the tax evasion category though.


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## tecate (18 Jul 2018)

T McGibney said:


> Ok, sorry, I see your point now.
> 
> Some of the ideas you've mentioned (eg claiming tax deduction on repair of longtime defects) are in the tax evasion category though.


As regards longtime defects, I guess I've just mentioned a broken window pane and not having painted for many years.  Both are necessary items for the rental of the property. We promised the tenant we'd sort out both.  I can't imagine either of those could fit into the 'evasion' category. At the same time, I had quite a bit of prep to do before i could rent it out - and there were costs that came with that.  Of course, I'm out of pocket for that and can't claim it.  That's just the system that's in place so I guess I just have to accept that.


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## cremeegg (18 Jul 2018)

tecate said:


> and tenant is a sibling of my next door neighbour..so not expecting any problems there.



Bad idea. Thats a recipe for trouble. Getting a tenant to leave when they are supposed to is difficult enough, because tenants find it hard to find new homes, and if they don't leave willingly it will take months (years perhaps), to get them out. This particular tenant will find it impossible to find a new home next door to their sibling.

Some opinions for what they are worth.

Don't tell the bank.
Don't paint until after the tenant moves in.
*Don't let the house to your neighbours sibling.*


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## tecate (18 Jul 2018)

cremeegg said:


> Bad idea. Thats a recipe for trouble. Getting a tenant to leave when they are supposed to is difficult enough, because tenants find it hard to find new homes, and if they don't leave willingly it will take months (years perhaps), to get them out.*.*



I don't really understand the point you're making?  Are you saying that any contract can be broken then?  If so, we are all taking a risk in renting out any property...so what's the difference?

You seem to think the connection with next door is an issue whereas I see it as a major advantage.  I know who the tenant is very well...in know the pedigree of them and I know that my house will be returned in one piece and I won't be screwed over.


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## Bronte (18 Jul 2018)

tecate said:


> I don't really understand the point you're making?  Are you saying that any contract can be broken then?  If so, we are all taking a risk in renting out any property...so what's the difference?
> 
> You seem to think the connection with next door is an issue whereas I see it as a major advantage.  I know who the tenant is very well...in know the pedigree of them and I know that my house will be returned in one piece and I won't be screwed over.


Oh dear.

Good luck with your written _pedigree_ contract.

 But as most things don't end in disaster you've an excellent chance of all going well. Get a good deposit and rent monthly upfront.


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## Bronte (18 Jul 2018)

cremeegg said:


> Bad idea. Thats a recipe for trouble. Getting a tenant to leave when they are supposed to is difficult enough, because tenants find it hard to find new homes, and if they don't leave willingly it will take months (years perhaps), to get them out. This particular tenant will find it impossible to find a new home next door to their sibling.
> 
> Some opinions for what they are worth.
> 
> ...


Agreed on the bank, and we've never had a poster on here who said a bank pulled their 'home' rate if they rented. He'll get away with painting if it's after first letting, not likely to be checked anyway, just make sure he has a receipt.  Plus it's a genuine registered letting. Nothing wrong with that. 

Hadn't thought about the possibility of knowing the tenant via a desperate neighbour given the current market!


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## tecate (19 Jul 2018)

Bronte said:


> Oh dear.
> Good luck with your written _pedigree_ contract.


Are you saying all tenancy agreements are rubbish or somehow what I have in place is rubbish?  If the latter, I'm all ears.  If the former, then I really see it as a non event.  Ie.  I'm generally aware that it's difficult to dislodge tennant's but if I couldn't have taken any further action to assuage risk, then I have to make myself content with that.


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## Thirsty (19 Jul 2018)

Any contract is only as good as the people signing it.

No matter what clauses you think you may have, the minute one party starts to act the maggot, it costs money.

Worse still we don't have an effective process to handle disputes.


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## tecate (19 Jul 2018)

Thirsty said:


> Any contract is only as good as the people signing it.
> 
> No matter what clauses you think you may have, the minute one party starts to act the maggot, it costs money.
> 
> Worse still we don't have an effective process to handle disputes.


Yup...and whilst I may not have the actual experience of it, I was aware that the laws/systems/process don't protect landlords. Of course, who could be happy with that.  However, it seemed like I was doing something especially wrong than any of the rest of you that have tenancy agreements in place (or fall back on whatever tenancy law without an agreement) according to some comments....but if that's not the case, I'm happy enough if i've done all that I can do.


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## renter45 (19 Jul 2018)

Does a replacement gas boiler get written off in full or over 8 years?


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## Bronte (19 Jul 2018)

Boiler would be one year. It’s a repair/replacement. And I refuse to put any item costing less than 100 euro under wear and tear. If I’m ever audited and revenue want to nit pick on that fine by me.


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## Bronte (19 Jul 2018)

tecate said:


> Are you saying all tenancy agreements are rubbish or somehow what I have in place is rubbish?  If the latter, I'm all ears.  If the former, then I really see it as a non event.  Ie.  I'm generally aware that it's difficult to dislodge tennant's but if I couldn't have taken any further action to assuage risk, then I have to make myself content with that.



I’m merely pointing out to you that in my opinion written contracts are pretty useless given the fact that it’s all taken care of by the law and that in general enforcing a contract against a tenant in Ireland is a waste of time and money.


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## Brendan Burgess (19 Jul 2018)

T McGibney said:


> That's why it never makes sense to break your own windows to attract tax relief on repairing them.



What a great line.  I have seen a lot of this type of thinking and have found it difficult to explain why it's wrong. That is a great explanation.


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## The Horseman (19 Jul 2018)

Bronte said:


> Boiler would be one year. It’s a repair/replacement. And I refuse to put any item costing less than 100 euro under wear and tear. If I’m ever audited and revenue want to nit pick on that fine by me.



I would have thought the repair replacement was depreciated over the 8 yr period. Similar to other white goods purchased for rental purposes.


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## Brendan Burgess (19 Jul 2018)

Thread closed as the question has been answered.

Abusive posts deleted.

Brendan


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