Typical mortgage rates for rental properties
- Thread starter Galen
- Start date
5% plus.
To be honest, you would be mad to take out a new mortgage on a rental property at the moment - particularly when you take account of the fact that 25% of interest payments are non-deductible for tax purposes. You would also be caught by the new Central Bank limits, unless you are re-financing the full value of an existing loan.
To be honest, you would be mad to take out a new mortgage on a rental property at the moment - particularly when you take account of the fact that 25% of interest payments are non-deductible for tax purposes. You would also be caught by the new Central Bank limits, unless you are re-financing the full value of an existing loan.
And don't you just laugh when we hear there is a rental crisis in Dublin and rents goign through the roof but nobody wants to invest due to the figures not stacking up. Interest rates, plus the 25% plus the UPC all have lead inevitably to the dreaded investors/landlords avoiding the market. (that's not counting the fact there is no proper building going on).
I can see landlords cashing out if forecasts are correct.
Absolutely agree.
I have no doubt whatsoever that the restriction on the deductibility of mortgage interest payments is a significant factor in the dramatic reduction in the supply of rental properties in recent times and the consequent increase in rents. Anecdotally, I know of a number of landlords that are planning to quit the business in the near future, largely because they are finding that they cannot make the numbers work on an after-tax basis - even with cheap trackers.
The Housing Agency commissioned a detailed report from DKM on the private rental sector last year (link below - it's well worth a read if you are interested in the area). One of the key recommendations in the report was that the ability to deduct the full amount of any mortgage interest payments should be restored immediately in order to encourage sustainable investment in the sector.
Aside from the economic arguments, there is also an issue of fairness or equity here - why should be business of providing residential accommodation be treated differently to any other business?
[broken link removed]
Bronte & Sarenco I agree with your posts. Until it is treated as a business and the RTA is amended to have balanced legislation in this area and a PRTB that is both efficient and not having an inbuilt prejudice in its rulings there will be a semi dysfunctional rental system in this country. You also have a significant amount of elected public representatives who are prejudiced against landlords.
I will list some of the obstacles that a landlord has to overcome over and above what I have already stated.
Banks charge approx 0.5% to 0.7% over the SVR rate.
Insurance Companies charge a higher rate for Insurance.
You have to fund the PRTB.
When purchasing you will pay for your own solicitor and for the solicitor that the banks choose from their own panel.
You will probably need to pay for an Accountant.
I do not think you are entitled to claim for travelling expenses when looking after your property?.
You only get writing off 75% of your Interest for tax purposes. You could end up paying tax even though you lost money.
You are not entitled to write off the LPT. You pay it out of after tax income if you are lucky enough to have made a profit.
You will also have the "pleasure" of dealing with an outfit called Irish Water who cannot give a straight answer to anything in this particular area.
You can be classified as self employed and if you fall on hard times you have no safety net.
I personally will be discouraging any of my family from getting involved in this business.
I will list some of the obstacles that a landlord has to overcome over and above what I have already stated.
Banks charge approx 0.5% to 0.7% over the SVR rate.
Insurance Companies charge a higher rate for Insurance.
You have to fund the PRTB.
When purchasing you will pay for your own solicitor and for the solicitor that the banks choose from their own panel.
You will probably need to pay for an Accountant.
I do not think you are entitled to claim for travelling expenses when looking after your property?.
You only get writing off 75% of your Interest for tax purposes. You could end up paying tax even though you lost money.
You are not entitled to write off the LPT. You pay it out of after tax income if you are lucky enough to have made a profit.
You will also have the "pleasure" of dealing with an outfit called Irish Water who cannot give a straight answer to anything in this particular area.
You can be classified as self employed and if you fall on hard times you have no safety net.
I personally will be discouraging any of my family from getting involved in this business.
Totally agree with all the difficulties outlined above.
I find it difficult to see how anyone with a mortgage on a rental property is breaking even never mind making a profit. Taxing a business that is actually losing money is wrong.
It contributes to other things going wrong in the system - landlords avoiding registering, being reluctant to pay for necessary repairs, and having to increase rents to take into account all their extra costs & taxes.
Yet, the government cannot & indeed should not provide housing for everyone in the state. A properly functioning private rental sector is an absolute necessity.
The PRTB has turned renting a property into an absolute minefield if tenants decide not to pay rent or overhold. Cases before the PRTB should be adjudicated on within a month at most.
I find it difficult to see how anyone with a mortgage on a rental property is breaking even never mind making a profit. Taxing a business that is actually losing money is wrong.
It contributes to other things going wrong in the system - landlords avoiding registering, being reluctant to pay for necessary repairs, and having to increase rents to take into account all their extra costs & taxes.
Yet, the government cannot & indeed should not provide housing for everyone in the state. A properly functioning private rental sector is an absolute necessity.
The PRTB has turned renting a property into an absolute minefield if tenants decide not to pay rent or overhold. Cases before the PRTB should be adjudicated on within a month at most.
Dermot you need to add.
Every body will hate you because you are a landlord and everybody agrees that they are the worst of the worst.
In relation to paying an accountant, that's not a negative as it's tax deductable.
(And I'm deducting LPT and did so for NPPR and as stated on here before I'm willing to argue this with revenue all the way. And yes my accountant has warned me of the risk and it's on my head not his.)
Every body will hate you because you are a landlord and everybody agrees that they are the worst of the worst.
In relation to paying an accountant, that's not a negative as it's tax deductable.
(And I'm deducting LPT and did so for NPPR and as stated on here before I'm willing to argue this with revenue all the way. And yes my accountant has warned me of the risk and it's on my head not his.)
This is the real issue. Everything else pales in comparison.
Bronte
Unlike the position with the NPPR, I'm afraid there is no ambiguity regarding the LPT - it is not a deductible expense for income tax purposes.
Minister Noonan has accepted in principle the recommendation in the Thornhill Report that LPT be a deductible expense in calculating a landlord’s taxable rental income and stated in the Dail that the deduction would "be phased in over a number of years with the start date being determined by the economic and budgetary situation". However, the Government has not yet decided to bring the deduction into effect. Until the necessary amendment is made to section 97 of the Taxes Consolidation Act 1997, LPT is not a deductible expense.
Yes Bronte I actually thought of you when I was writing the post as you have made your position clear on the LPT & NPPR charges. I have not claimed them myself but saying that I am irritated by not being able to claim it as an expense does not even go near describe how I feel.
It is not politically correct to be thinking like that.
A lot of politicians and vested interest groups think that by screwing landlords that they are doing the population a service when the exact opposite is the case as landlords have to recover the costs by raising rents in order for them to stay in business.
Agreed
It is not politically correct to be thinking like that.
A lot of politicians and vested interest groups think that by screwing landlords that they are doing the population a service when the exact opposite is the case as landlords have to recover the costs by raising rents in order for them to stay in business.
And Dermot today in the newspapers we see the reality of housing issues with even more families in the counties surrounding Dublin being made homeless due to the rent caps not being increased in a rapidly rising rental market and no building going on combined with investors not keen to buy due to taxes.
And you can be sure a lot of those reluctant landlord who bought in the boom are being forced to increase their rents by banks who were buying time by allowing restructures or interest only deals.
And you can be sure a lot of those reluctant landlord who bought in the boom are being forced to increase their rents by banks who were buying time by allowing restructures or interest only deals.