Property Hacks

at

This morning.

In The Irish Times.

Fiona Reddan reports:

House hacking allows you to live in a home without actually paying for it thanks to the rent provided by other tenants.

And, given our rent-a-room scheme, which allows you to earn €14,000 tax-free from letting rooms in your house, Ireland may actually be a good place to try it out in….

…Unlike just getting a tenant to help you pay your mortgage, the goal of house hacking is to get the tenants to pay all your mortgage, thus allowing you to either live it up in style, reinvest the funds or pay down your mortgage with prompt haste.

Good, greedy times.

How renting out rooms can help pay for your house (The Irish Times)

Previously: Irish Times: The Property Porn Hub

38 thoughts on “Property Hacks

  1. George

    How is this an article? It should be one sentence:

    The tax-free income from renting a room will be higher than your mortgage payment.

    1. Rob_G

      Agreed.

      Also, why is Bodge trying to everyone all riled up over this – if more people were renting out rooms, there would be much less of a housing crisis.

      1. George

        Well it is perverse that people who rent spend more on housing than people who the banks will lend to.

        They typically have lower incomes and so spend a much higher percentage of their income on housing which is often of a poor standard. If you can afford to pay 1,000 in rent you can afford 800 in mortgage repayments.

        Those who the banks lend to can very quickly ratchet up their wealth by the means described in the article while those renting can accumulate little as they spend so much on housing.

        1. Rob_G

          Not that I disagree with you, but that is hardly the fault of people who bought a house to live in, and who want to take the sting out the monthly mortgage payment by taking in a lodger. If everyone stopped taking in lodgers tomorrow, the property crisis would be much, much worse.

          On a separate note, I would fully support the govt raising property taxes to a more equitable level.

          1. Cian

            The only problem with “increasing property taxes to a more equitable level” is everyone renting is actually (indirectly) paying the property tax. To make it worse, the landlord can’t deduct property tax from his/her tax bill. So the tenant will be charged property tax + landlord’s income tax.

          2. Rob_G

            Market will set the rents.

            Obviously any change to the tax system would have a knock-on effect on other areas, etc. but between taxing a worker’s income at 42%, versus charging someone an extra fraction of a % on their million-euro asset, I would pick the later.

        2. wearnicehats

          George. Spend a bit of time on mortgages.ie and come back to us and let us know the deposit you would require on an average dublin house in order to get a repayment plan of €800 per month. We’ll wait.

        3. ollie

          “housing which is often of a poor standard.”
          I assume you have the facts to back up this stupid statement George?

      2. Ollie Cromwell

        Bodger getting everyone riled up ?
        Perish the thought that an internet forum would want to encourage debate.
        Would ” nothing to see here,move long please ” suit you ?

    2. Spaghetti Hoop

      Exactly. Everyone knows this. For a mortgage-holder, their property can be their biggest asset as well as their biggest liability. There will always be renters who don’t want either.

    1. Col

      I think they’re just pointing out how ridiculous the economics of it are- renting a room in a house is more expensive than the mortgage on that entire house.

  2. Brother Barnabas

    unlikely 14k a year will cover an average mortgage today

    (and if you exceed 14k, the entire amount is taxable)

    1. George

      Just used a mortgage calculator and payments per month were 878.80 based on an income of 60,000 and borrowing 210,000

      The 14,000 limit is for one room. That’s 1166 per month tax free. That is a generous allowance. Nobody should be charging more than that per room. You can rent a second room if you have it and you can still claim the tax break on the first.

      1. Rob_G

        14,000 is the limit per household. Very unlikely you would get close to that amount without renting out several rooms, even in Dublin.

        1. George

          Yes, you will exceed it if you rent out several rooms but it is tax-free income. i.e. money you get that you pay zero tax on. People complaining that 14,000 tax free additional income is not enough for doing nothing are full of themselves.

          1. Rob_G

            I’m not sure what point you are making.

            I don’t think I have seen anyone on this thread claiming that €14,000 is ‘not enough’. As a general rule, tax relief is a very good idea, as it increases the amount of accommodation available, and does so quickly, and at almost zero cost to the taxpayer.

      2. Jonickal

        You won’t get €1,166 per a month for a room if you’ve paid €262,000 for the house (€210k/0.8).

          1. Brother Barnabas

            ok

            so you buy an apartment for 210k and then you rent out “several rooms”

            sounds good

            other than Narnia, where are these apartments with “several rooms” for 210k?

        1. George

          Didn’t say you should or would. I said charging more than that is excessive. If you have a two bed apartment you can pay the mortgage with tax-free rental income by renting a room i.e. your tenant will pay your mortgage for you.

          1. ollie

            @ George
            €1,166 per a month for a room in a 2 bed apartment worth €210k?. If you are looking for a room to rent give me a shout!

          2. George

            Don’t know what you’re talking about, Ollie. I never said the apartment would cost €210k nor did I say the room would cost that much to rent. In fact I said the exact opposite.
            There is no such thing as 100% mortgage.

          3. George

            There are plenty of 2 bed places between 250,000 and 270,000 on Daft right now. 210 of a mortgage PLUS 60,000 deposit.

    1. Adam Reynolds

      Once society has provided enough to everyone to ensure equal opportunity and a chance at dignity, income should be based mainly on merit rather than ownership. In this example, income is based to a significant degree on ownership. That type of economic structure will tend Ireland towards levels of inequality that are unjustified and ultimately harmful to us all.

        1. Adam Reynolds

          The original question was about identifying the problem, not the solution. I don’t claim to have a perfect answer to your question. It’s complex and I’m not an economist. I’ll give it my best shot.
          In this specific instance, the fundamental issue is that the cost of renting is high relative to the costs associated with a mortgage. Those prices should be more or less the same. They are not in equilibrium mainly because of how hard it is to buy property. Purchasing is hard because of numerous factors including high house prices and high living expenses relative to the typical income as well as the high deposits required by banks. So fundamentally, it comes down to adjusting lending practices and building adequate amounts of suitable affordable housing, a project which could be supported by the state more than it is currently. More generally, we should move away from those laissez faire economic policies which drastically favour capital over labor.
          With regard to this specific tax break, its utility to the state should be assessed. What is the total cost of the tax break per extra room made available due to the tax break? If that figure is equal to or less than the cost of providing housing by another method, then the tax break is worthwhile. If it is more, then the tax break is effectively a gift to property owners. I hope such as assessment has been made, but I’m skeptical of whether a Fine Gael led government would do so objectively.

  3. Vanessa off the Telly

    Is this news?

    back in the day the banks themselves –
    especially their brokers
    included Rent-A-Room income in calculating affordability

    like it must be at least 15year on the go now

    ah here
    are ye messing with me again lads

Comments are closed.