New Tax Relief for Landlords ?

[robert 200]

I have just read the Finance Bill regarding the new tax laws for landlords who provide
accommodation for rent allowance , HAP and RAS recipients.

The law commenced on January 1st 2016 - If you provide accommodation for the above for 3
years then you can claim 100% of the interest on your mortgage as an allowable expense
against your rental income. ( you can currently claim only 75% of the interest ).

So the reality is that in November 2019 when your tax returns are due for 2018 that is when you will receive the benefit of this tax relief.

The Irish Property Owners Association have stated that 71% of landlords are in negative equity
therefore I firmly believe that the chronic state of homelessness will just get worse as landlords
are forced to sell their properties by the banks.This will particularly apply to multi - unit dwellings
i.e. houses in flats.

 

[Bronte]

I suggest Robert you change the thread title before the thread is closed by the Mods.

Properties are being sold by investors and conversions of bedsits and flats back into one family dwellings are taking place. And yes homelessness is getting a lot worse, I looked at rent in my area yesterday and it's still on the rise and very few properties available where once there were plenty.

This new 25% is exceedingly complicated another ill conceived idea to incentivise investors.

 

[T McGibney]

I wrote a blog post recently explaining how this will work.

http://mcgibney.ie/2016/01/06/noonans-useless-tinkering-with-landlords-interest-relief/

The whole idea is harebrained.

 

[diver]

My 7 year RAS tenancy with SDCC is up this September. I'm waiting until then to put my property up for sale. I dread putting my excellent tenant into an uncertain accommodation situation but I simply cannot afford to be a landlord anymore. This completely ridiculous scheme of Minister Noonans is too little and far too late.

 

[Bronte]

I wrote a blog post recently explaining how this will work.

http://mcgibney.ie/2016/01/06/noonans-useless-tinkering-with-landlords-interest-relief/

The whole idea is harebrained.

That's funny Tommy and I looked into it and couldn't believe it. It's also very complicated. Take me for example, I've no written leases, the tenants can go if they want, or stay if they want, some are on rent allowances and some are not. My accountant is going to go mad in three years as am I to see if my tenant x who was there from Jan 2016 to Nov 2016 who leaves voluntarily and replaced by tenant y for two years without rent allowance, but me being open to rent allowance etc etc etc. qualifies me for some extra interest relief.

Good news is most tenants, especially those on rent allowance won't leave now as they are stuck, there is no other comparable property in my case for them to leave. My brother has a family in a one room flat (two adults and one five year old), he doesn't want them as he thinks it's too small, but they won't move and have been there a few years now. I have a guy with a heart condition in a large one bed and a child, they won't move either and the child is getting older, at least they have a back yard but no garden or anything. One of my brothers other tenants in a one bed has just last week been offered a corporation house, he's been there 12 years so must finally have arrived to the top of the list and he doesn't want it. (currently 10 min walk from city center) I shall go mad if I find out this single guy has been offered a two bed house, we're just waiting to hear what he has been offered exactly. In another city about five years ago my tenant moved out to move into a two bed house a friend of his got from the corporation as the 'owner' was heading off to South Africa for a year and needed someone to mind his new house.

I'd love to invest in a property, willing to renovate and convert near derelict properties but there is no way the figures stack up so it won't happen. The final nail was the 25% cut. There's also no incentive to upgrade but at least repairs and refurbishment can be written off.

 

[cremeegg]

The injustice of offering a tax relief to landlords of socially supported tenants and not to private tenants is breathtaking.

I have two properties in the same estate, both tenants are similar families, two parents two kids.

One family is in receipt of Rent Allowance, neither parent works.

The other family, both parents work and pay rent from their wages.

Which one do I get tax relief to support. If I was a private tenant I would feel very hard done by. "Labour" party is a misnomer. I thought last year maybe Joan Burton understood this but seemingly not.

 

[Bronte]

Good point Cremeegg, I watched for the first time episode one of the RTE programme 'Homelessness' about those staying in hotels. How can a rich country like Ireland justify that kind of living in this day and age. And that's the hotels, I haven't seen the B&B's yet which are supposed to be dreadful altogether.

 

[44brendan]

I'm not a landlord so have no dog in this fight!! However, I cannot understand the rationale behind this restriction. It made some sense when first introduced in order to curb the growth of speculative BTL purchases. However, in the context of the current housing crisis and the need to incentivize new landlords into the market it is a major deterrent. The Government and their advisors are not fools so they must be aware of the disincentive. While "protecting" landlords may not be a vote winner it surely can be marketed as an effort to increase the level of rented properties to the market!! So what is the agenda behind the continuity of this restriction?
Yes there will be a reduction of tax income from the rental sector but that would be partly offset by a growth in new properties made available for rent and to a large extent by a reduction in the need for alternative social housing.
To many landlords its as unfair and as big an issue as the high SVR's but on this issue the solution is totally within the Governments remit.
Can anyone supply a good rationale for inaction on the issue?

 

[T McGibney]

It made some sense when first introduced in order to curb the growth of speculative BTL purchases.

??? It was introduced in May 2009, 8 months after the near-collapse of the banking system, when the speculative BTL purchase market was already dead.

Can anyone supply a good rationale for inaction on the issue?

Yes, the hysterical leftwing & establishment prejudice against landlords, inflamed by Joan Burton's intemperate rantings in the 2008/09 period, which motivated her then constituency colleague, the late Brian Lenihan, to foolishly introduce the restriction.

 

[Dermot]

There is no private sector business that has to put up with the same interference and regulation by Government as the private rental sector. You have about a half a dozen Government quangos trying to make your life difficult.
Why can the Government not see that being a Landlord is not the goldmine that people think it is. It is very difficult to plan anything as a landlord when you are at the mercy of Governments with an ideology that sees Landlords as some group that needs to be punished. There is a need for long term thinking that is fair and equitable. No matter who thinks it there is never going to be enough public housing provided by the state no matter who is in power. It is idealistic but not achievable to provide social housing in good condition at an affordable rate to the state. There has to be a system where the two systems can work in harmony.
There does not seem to be a fully costed appraisal of the true cost of social housing. To do so you would need to take account of the following at least capital cost of site and building and furnishing costs, Repairs and maintenance, administration costs of doing the repairs and maintenance, Insurance costs, rent collection and other charges foregone, bad debts. Every politician talks about the payments made to landlords by the Government but no account is taken of the direct and indirect taxes that landlords pay arising from this.
I often wondered if it were possible to do such an analysis of the approximate nett costs to Government of privately provided accommodation and the actual cost to the state taking all costs into account. Would there be an outrageous difference.?
For political idealogical reasons this is not going to happen so we will be stuck with this system forever. I am well aware that there is a need for a social housing scene but surely there can be a system whereby there can be a long term plan that is not subject to the whim of a Minister every time they get a hair brained notion into their head that their idea would be a vote winner.

 

[cremeegg]

Every politician talks about the payments made to landlords by the Government but no account is taken of the direct and indirect taxes that landlords pay arising from this.

I often wondered if it were possible to do such an analysis of the approximate nett costs to Government of privately provided accommodation and the actual cost to the state taking all costs into account. Would there be an outrageous difference.?

For political idealogical reasons this is not going to happen so we will be stuck with this system forever.

I think that this is an excellent point. If a landlord is in arrears and paying all the rent to a NAMA bank then basically 100% is going back to the govt.

If the landlord is doing well she may be paying 50% of the rent in income tax and part of the rest in indirect taxes. PRTB, Insurance levy, VAT.

You say that for political reasons this won't change, but perhaps if more people were aware of this it might. As a landlord I had never considered this.Maybe the landlords association would take it up.