Buy-to-let investors will be allowed to file property tax

[BoyRacer]

Buy-to-let investors will be allowed to file property tax as expense - Charlie Weston → independent.ie/business/iris … 57475.html

The non-principal private residents (NPPR) and the household charge are not allowed as expenses when landlords are working out their profit as part of a tax return.
But Finance Minister Michael Noonan has confirmed the property tax may be treated differently. He said he intends to amend the new legislation to allow the tax to be treated as an expense for landlords.
"The Thornhill Group recommended that the local property tax paid in respect of a rented property should be deductible for income tax or corporation tax purposes, in a similar manner to commercial rates.
**“This is not provided for in the Finance (Local Property Tax) Act 2012 but it is the intention of the Government to introduce such a provision on a phased basis.”
**
there is more

[khards]

Makes sense, as it is just as much as an expense as redecorating.

[jdwexford]

Karl Deeter seems to be a bit mixed up

Not to allow the tax as an expense would mean someone with mortgage interest of €10,000 and rental income of just €5,000 would end up paying property tax, despite having a negative rental income, he said.

You’d still pay property tax in this situation.

However if Rental income was 10k and MI was 5k, you add the property tax as an expense and this reduces the tax due

[Coles2]

At least that’ll finally puts a definitive end to the debate about whether tenants should pick up the lab for their landlord’s property.

[Cheeky_Offer]

@Coles2

At least that’ll finally puts a definitive end to the debate about whether tenants should pick up the lab for their landlord’s property.

Which is ridiculous. The tenant uses the services. Now we have all rental properties effectively dodging the tax. CRAZY move.

In the UK the user pays (and pays a lot more). It should be the same case in Ireland. Yet another sop to big landlords. When your PAYE goes up don’t come crying to me then. END RANT. 5/10 due to lack of profanities.

[Duisigh]

Very slow day for journalism. From the report .
environ.ie/en/PublicationsDo … 669,en.Pdf

I have highlighted the bit I find extremely worrying

Deductibility of LPT for tax purposes
5.2.1 The terms of reference of the Group do not require it to
consider whether the LPT (including the add-on of €200
in respect of NPPR properties) should be deductible for
income tax and corporation tax purposes where the
property is a rental property. However, the issue was
raised in a number of submissions made to the Group
Income tax and corporation tax are charged on the
income from the letting of a property (both residential
and commercial) on the net rents receivable from the
property after deducting certain items of expenditure.
The deductions allowed in computing the net rent
receivable in respect of a property are set out in tax
law

and must be incurred by the person liable to
income tax or corporation tax on the rents from the
property. The allowable deductions are:
• any rent payable on the property
• any local authority rates payable on the property
• the cost of any goods or services required to be
provided under the lease
• the cost of maintenance, repairs, insurance and
management of the premises (excluding capital
expenditure)
• interest on monies borrowed to purchase, improve
or repair the premises (in the case of residential
properties the deduction is limited to 75% of the
interest) 3 In addition, capital allowances are given for the cost of
furnishing residential rented properties
41
.
5.2.4 The restriction on the amount of interest that is
deductible was introduced in 2009 as a revenue raising
measure.
5.2.5 For tax purposes, landlords are currently required to
compute the net rents received without being allowed a
deduction for either the household charge or the NPPR
charge.
5.2.6 Commercial rates paid to local authorities are treated as
a legitimate expense in calculating rental income from
commercial property for tax purposes.
5.2.7 LPT will be a recurring annual tax to be paid by owners
of properties, including the owners of rental properties.
LPT will also be a genuine expense of the transaction
under which the taxable rents are received.
Landlords
may, to some extent, be able to pass on the incidence,
or part of the incidence, of LPT to tenants. However, it
is unlikely that they will, particularly in the short term, if
ever, be able to pass on the full amount of LPT they will
be obliged to pay in respect of a rental property. For
this reason, there would appear to be an equity
argument for allowing, at least a portion of, LPT
(including the NPPR addition) paid in respect of a rented
property to be deductible for tax purposes in the same
way as commercial rates are deductible for tax
purposes.The Group recognises the considerable pressures on the
public finances and the need to bridge the gap between
expenditure and revenue. For this reason, the Group
suggests that consideration be given to phasing in
deductibility over a period of years.
5.2.9 The Group considers that it is for Government, having
regard to the prevailing budgetary situation, to decide
on the time span for phasing-in deductibility and on
what percentage of LPT to allow as a deduction from
gross rents for tax purposes.