Sunday Indo: Time to get out of rental property

[Blue_Horseshoe]

From the Sunday Independent, 7th Jan 2007, an article by Alan Ahearne, a former senior economist at the Federal Reserve Board in Washington DC. He now lectures in economics at NUI, Galway… here’s his profile …

economics.nuig.ie/personnel/ … rson_id=72

THE word on the street is that a lot of investors who bought property in Ireland over recent years are getting nervous. At least that’s the word on the streets of Galway, but the same is almost certainly true in other places across the country.

It is, alas, human nature to think that we can successfully predict the exact turning point of a housing cycle. By definition, very few investors get out at the peak, and most investors are left holding the baby as house prices drop.

Can anyone point to a single soft landing? In truth, a soft landing in the housing market is like the proverbial free lunch. There ain’t no such thing. Housing markets just don’t work that way.

And there’s the rub. Ireland’s property market has only sentiment keeping it at the current dizzying heights. Nothing else.

Link to the full story;

unison.ie/irish_independent/ … e_id=15078

(Subscription required)

Blue Horseshoe

[Ireland_is_different]

Here is an index on the competitiveness of the Irish** effective tax rates** on property.

Does anyone else think that Grant Thorton are being a bit generous with their expenses on this rented property? Do landlords usually write off as much depreciation on a property each year (Assuming this was written when house prices WEREN’T falling)
globalpropertyguide.com/Europe/Ireland/Tax-Pages

Just taking the first example of a monthly rental income of EUR 1,500

Couple’s joint monthly
Annual Rental Income → EUR 18,000 (12 mths x EUR 1,500pm)
**Less Costs → EUR 3,600
Less Depreciation → EUR 5,357
Taxable Income → EUR 9,043

Income Tax rates
Up to EUR 68,00 20% → EUR 1,809 (EUR 9,043 x 20%)

Annual Income Tax Due → EUR 1,809

Deductions
Withholding Tax 20% → (EUR 3,600)??>
Net Annual Tax Due → EUR 1,791??>

Tax Due as % of Gross Income 10.05%**