New taxes on the way

[toughbutfair]

I don't see how the interest on a loan to buy the property that you are renting out is a tax break.

Surely, the cost of finance is a cost, and tax is on profit, not turnover.

It is fashionable to rubbish all land owners, landlords etc but let's keep it honest. Nobody pays tax on turnover.

As we are really in need of getting more tax, I'd support 0% deductions for landlords who bought before, maybe 10 years ago, as they have still made a lot from capital gain. While it is still wrong in principal I'd support it as a need to get more tax income.

however, some landlords bought 3 years ago, paid a lot of stamp duty, and have lost money on their asset, and if they fixed their mortgage mightn't be even meeting their interest repayments - should they pay income tax on whatever income they get?

And no - I am not a landlord.

[constitutionus]

im not one either but from what i can tell thats whats happening and is a main reason why theres a fear of a glut of extra properties on the market (i.e amateur landlords flogging properties that now dont bring in more than the mortgage costs)

far as i know they do indeed pay income tax on the rent and the big boys pay corporation tax on their managment companies fees on appartment blocks.

the only way around it is for small landlord to work in the black market as unregistered landlords.

[Watcher1]

I don't see how the interest on a loan to buy the property that you are renting out is a tax break.

Surely, the cost of finance is a cost, and tax is on profit, not turnover.

It is fashionable to rubbish all land owners, landlords etc but let's keep it honest. Nobody pays tax on turnover.

As we are really in need of getting more tax, I'd support 0% deductions for landlords who bought before, maybe 10 years ago, as they have still made a lot from capital gain. While it is still wrong in principal I'd support it as a need to get more tax income.

however, some landlords bought 3 years ago, paid a lot of stamp duty, and have lost money on their asset, and if they fixed their mortgage mightn't be even meeting their interest repayments - should they pay income tax on whatever income they get?

And no - I am not a landlord.

I was not saying it was just or not, I was merely responding to a poster who believes that rental income is taxed and therefore the government gets some money in the end. I simply pointed out that this was not necessarily true as landlords get tax breaks on rental income so there is not as much tax generated through rental income.

Whether its right or wrong is indeed debatable due to the number of tax schemes available to landlords - mortgage interest relief, s. 23, s. 50 and all the other tax schemes (which in fairness are being curtailed, just not fast enough).

One "fix" (which I might add I have not fully thought through) is that landlords are not allowed mortgages, but rather commercial loans and no more s.23 style tax reliefs. The tax reliefs were widely abused and went more to lining the pockets of developers through higher house prices thereby negating the benefit to the purchaser. But that's another thread.

Commercial loan interest is higher than mortgage interest and it would act as a deterant to the amateur landlords and also keep specualtion to a minimum. Could be more benefits attached, but like I said, I have not thought it through so could also be down sides and negative impacts.

[smitchy2]

I disagree with you on its equitability - once you earn 33K and over you pay almost 50% of the excess in tax (and in some cases more than 50% of your post 33K income). That's not right. What you are basically saing is that once a person earns the average industrial wage they should fork over 50% of their excess income. That's shameful.

Yes, on their excess income.
So someone on €50k will still net about €36/37k and will paying income tax at 27%.
People will not be paying 50% of their salary on tax until they earn about €90k(and that is a single person, the tax breaks for married couples make this significantly higher).

[Dios]

Thats simple to avoid, tax welfare if income goes over a certain threshold, say total income(includes welfare, saving interest etc etc) over 8k should be subject to taxation, albeit at a low rate.

Welfare is paid out of the tax coffers, so taxing it is a bit pointless, simply reducing it would make more sense.

Taxes should at least meet current expenditure requirements which are projected at €47bn this year (Note, these have risen from €30bn in 2004).

Very interesting post.

[Watcher1]

Yes, on their excess income.
So someone on €50k will still net about €36/37k and will paying income tax at 27%.
People will not be paying 50% of their salary on tax until they earn about €90k(and that is a single person, the tax breaks for married couples make this significantly higher).

I'm not talking about effective tax rate, I'm talking about the point at which you start to pay excessively high taxes on any additional income earned. While I will agree that for most discussions about tax take, it is the effective tax rate that should be considered, however, my argument is that our current tax system with only 2 bands is wholey inadequate and therefore needs to be reformed in its entirety otherwise we will not achieve a fair and equitable tax system fit for todays purpose.