Dept of Finance Launches Consultation on Tax Treatment of Rental Income

Hi Sarenco,

I agree with you, but the losses point is a bit of a red herring; I doubt that there are very many landlords making a loss on a residential investment property.

And the items that can't be deducted are thin on the ground; 20% of the interest (which is en route to 0%), LPT, and that's about it.

Gordon
 
The simple fact is that landlords should be treated like any other business. All businesses get capital allowances for the building which is normally over a 25 year period. In business costs are deductible, I can assure you landlords are making losses on a residential property investment. Landlords who bought at the boom levels are making payments on mortgages that exceed the net income they receive from rental.

Investment property values are not being allowed find their natural value as the govt is continually interfering with the market due to populous views. This interference is seen both in the various legislation enacted and also in the tax treatment of individual landlords. Investors will leave the market and no new ones will enter because the market is not allowed function the way it should and this is most notable in the tax treatment. Treat landlords like any other investors and let them take the rough with the smooth.
 
Hi Gordon

I personally know of a number of situations where a residential letting business was loss making last year for a variety of reasons. The losses can obviously be carried forward but cannot be netted against other taxable income.

In any event, my key point is that a residential letting business should simply be treated the same as any other business for tax purposes. No gimmicky tax incentives are required.
 
The Horseman said:
Landlords who bought at the boom levels are making payments on mortgages that exceed the net income they receive from rental
Click to expand...

That doesn't constitute a loss.

Mortgage repayments are made up of capital and interest; only the interest element is relevant when ascertaining whether one is making a loss or not.
 
it does constitute a loss if the value of your investment is less than you paid for it when you come to dispose of it.
 
A capital loss is only useful if you have something to offset it against. what if you are selling your one and only investment property.
 
The sky rocketing headline rents as seen on the daft website and which the media are constantly quoting are only achieved by an extremely low percentage of those landlords currently renting. Existing tenants are not moving as there is nowhere to go. I would imagine 95% or more of propertys currently being rented are at least 30% below these headline rents. I know this is a guess but with the 4% rent cap my rents are at least 35% below the average current daft rents in my area. My point is that with current average rents way below headline figures perhaps less people are making as much profit as we think especially those on variable rate mortgages.
 
Motor & travel costs incurred in the management of the property. Local property tax. Repairs & maintenance costs that involve an element of improvement.
 
Nordkapp said:
the 8 year depreciation for wear and tear items is a joke given white goods tend to last just 3 years.
Click to expand...

White goods don't only last 3 years, that's not my experience but they certainly last less than my own white goods. You're allowed to write off the total after the 3 years if the item is caput. ie you write off the balance.
 

It's absolutly unreal the amount of changes they constantly do. I think us landlords are an easy bunch to attack. There is no logic to not treating us like any other business.
 
Last edited:
landlord said:
My point is that with current average rents way below headline figures perhaps less people are making as much profit as we think especially those on variable rate mortgages.
Click to expand...

Agreed and it's also worth bearing in mind that BTL rates are now typically north of 5%.
 
It may be useful to summarize how rental income is not treated the same as any other business.
 
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.
 
You must log in or register to reply here.
Menu
Log in
Register