Allowable Expenses - 3 bed investment property

murphaph1 said:
There are lots of businesses where tax evasion is much more difficult to detect and nobody bats an eyelid. Landlords are unfairly demonised by government, Revenue and the media. On Newstalk right know for example.
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Which business have tax evasion that is much more difficult to detect?
 
General practice medicine for a start. Basically anything where you pay for someone's time is exceptionally difficult to police. Yet landlords where the property is kind of difficult to hide, as is the price as the tenants are easily identified and questioned, are treated out of the box as tax cheats.
 
The RTB recommend landlord inspections at three monthly intervals. That seems reasonable to me and it's only fair that it should be an allowable expense. If the landlord wants to take in a football match or a gig enroute, is that really a problem? The exact same issue arises with anybody who legitimately travels in the course of their employment or profession. (Including tax inspectors doing field work!)
 
Most landlords probably live fairly close to their rentals because who wants to be travelling to the other side of the country to fix a leaking tap etc.
 
murphaph1 said:
Most landlords probably live fairly close to their rentals because who wants to be travelling to the other side of the country to fix a leaking tap etc.
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Probably true, but then again lots of "accidental" landlords might be letting out the former family home having moved for job or other reasons. Or might inherit a property at the other end of the country that they want to let out. Either way, be the journeys long or short, they should be allowable as legitimate costs of being a landlord.
 
Absolutely, it's just that the amount of "going to a gig at the taxpayers' expense (which of course it isn't)" trips would actually be low enough to look at closely if they seem to happen more often than other landlords. The data could be entered quite specifically for each property and ROS would know how far the properties are from the landlord's home address and so on.

Believe me, there are already far more sophisticated fraud algorithms in operation in banks, Amazon etc.
 
Not sure that things are quite as open for GPs as you might thing - published opening hours, published charges, very easy for Revenue to compare against other GPs in similar areas, very, very easy for Revenue to audit in detail if they chose to do so.


The difference with landlords is that the requirement to visit could be done on a fairly arbitrary basis, which wouldn't really apply to tax inspectors or most other people who travel for business. To be honest, I wouldn't have a huge problem with something limited, like the quarterly inspections that you mention. The idea of leaving it wide open to landlord discretion to decide on the need to visit would worry me a bit.

While that probably could be done in ROS, there's a value for money question as to the work and effort required to allow that kind of analysis would pay off in terms of the tax numbers involved. AFAIK, ROS doesn't track particular details of individual properties, it doesn't track how much you spend on plumbing or how much on smoke alarms - it just lets you put in details of the business profit resulting, and requires you to have the relevant details available for audit as required. So getting ROS to capture this level of detail around trips to individual properties would be a bit of a departure, and would incur significant costs in itself.
 
I don't think so. ROS is modified regularly enough. I think Revenue have in house software developers maintaining it so adding a few fields in the form and some new tables in the database would be trivial. They wouldn't even necessarily need to implement the fraud detection algorithms to discourage most would be tax cheats. The mere fact of asking for detailed information for each property let would scare most people into not declaring fake inspections. I would also be in favour of a hard limit of tax deductible visits to each property, perhaps no more than the RTB suggests. Something is badly wrong if a landlord needs to visit his property more often than once a quarter anyway.

We'll agree to disagree about GP's and how easy or otherwise it is for them to hide income. Some GP's take their time with you, some want you in and out in 5 minutes. I doubt a comparison between GP's is remotely easy to be honest. You say a GP can be audited, but sure so can a landlord. If you think it would be hard to compare landlords but it's easy to compare GP's I really can't agree with that sentiment.

I'm not picking on GP's by the way. The same goes for any service where you pay for knowledge or labour. From gardeners to GPs. It's just the way it is. I just don't get why landlords are assumed to be tax cheats by Revenue (see treatment of non-resident landlords and how tenants are expected to withhold tax at 20% and mad stuff like that). They have an asset that is impossible to hide. Their tenant's have leases that prove the rent paid. They are extremely easy to audit.
 

Yes, ROS is modified regularly. That doesn't make this a good candidate for modification. You can be sure they have a long list of demands for priority modifications, without this issue. The question isn't about whether ROS can capture a few extra fields. The question is whether Revenue want to make a fundamental change to the approach to taxation of rental properties, capturing information at a totally different level of detaul to the present day. There's also the data minimisation principle of GDPR, which would make it difficult or impossible for Revenue to ask for additional information just to scare people off.
You'd be surprised at the sophisticated tools available to Revenue and the decades of experience there that enable them to do cross-industry comparisons like this and identify the outliers for further attention.


You're aware of the long tradition of tax evasion in the residential rental sector, right?
 
RetirementPlan said:
You'd be surprised at the sophisticated tools available to Revenue and the decades of experience there that enable them to do cross-industry comparisons like this and identify the outliers for further attention.
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Exactly. A landlord claiming excessive expenses would stick out like a sore thumb!

RetirementPlan said:
You're aware of the long tradition of tax evasion in the residential rental sector, right?
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Equally applicable to many other sectors, construction, licenced trade, retail, hospitality, doctors etc. Point is that most of those sectors have gradually (or suddenly in some cases) been brought into compliance.

It is much harder for landlords (and others) to evade taxes now. Most tenancies are RTB registered now and the data is shared with Revenue. And tenants ability to claim tax relief on rent paid adds a further level of visibility to Revenue. Likewise, LPT. And the days of offshore accounts with addresses like 1 Main Street, London are long gone. You can't put cash into a bank account and expect it to remain hidden from Revenue. So, while it might once have been an issue, tax evasion by landlords is not a huge risk right now.

There is no basis for treating landlords differently to other businesses. Travel is a legitimate expense, necessarily incurred, and it it quite unjust that it isn't allowable when calculating taxable income.
 
There’s a distinction between active and passive income though.

Income from a trade or profession is not the same as a passive income stream from an investment.
 
There's work involved though, especially if you are "handy" and don't need to call a tradesman for every little thing. If something needs attention and I have to drive there to tend to it, it's an expense that comes straight out of the rent. The mileage should be deductable. It is in Germany.

The very fact the expense is incurred shows that the income is not (entirely) passive. If it was I could tell my tenants not to call me because Revenue says the money should just flow into my account without me lifting a finger.
 
I disagree.

I do my own tax return. I could pay someone €1,000 to do it. I don’t think that I should be able to charge for my time.

Management charges aren’t deductible for an investment portfolio. I can’t deduct the cost of my taxi if I go to meet my investment manager.

I’m very much pro the taxpayer but I think it would be preposterous to allow landlords to deduct for their own time or mileage.

Whether they do it in Germany or not is irrelevant.
 
Gordon Gekko said:
I disagree.

I do my own tax return. I could pay someone €1,000 to do it. I don’t think that I should be able to charge for my time.
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I'd agree with that. One's own labour is not a tax deductible expense for any business.

Gordon Gekko said:
Management charges aren’t deductible for an investment portfolio. I can’t deduct the cost of my taxi if I go to meet my investment manager.
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Being a landlord is far more active than having an investment portfolio!

Gordon Gekko said:
I’m very much pro the taxpayer but I think it would be preposterous to allow landlords to deduct for their own time or mileage.
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Time, yes, I'd agree. Mileage, though, is a perfectly legitimate expense. It is an absolute necessity to visit the rental property to show prospective tenants, carry out inspections and do (or arrange for) repairs. And, of course, if you outsource this to a letting agent, you can deduct their fees in full. Including any travel charges embedded or separately specified in their bill.


Gordon Gekko said:
Whether they do it in Germany or not is irrelevant.
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True-ish, insofar as it's not relevant to establishing the position under Irish tax law. But it is a guide to how things are done elsewhere and, at the very least, suggests that the position in Ireland is unduly onerous. Also noteworthy is that the UK allows landlords to deduct travel expenses including mileage.
 
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Fine if people choose to do things themselves, but don’t expect the State to pay you for the privilege!
 
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