Rent hikes loom as investors hit hard
RENTS are predicted to rise again as some property investors suffered a triple whammy in the Budget.
The measures may force more landlords to sell off properties, and the drop in supply may add to upward pressure on rents which have already increased in cities such as Dublin and Galway.
The investors who will suffer most are the amateur landlords who own a number of high-end buy-to-let properties in different locations, which they hoped to sell at a profit in the next few years.
Such amateurs who are in the PAYE system will be hit with a 4pc PRSI charge for the first time on net rental income.
The second hit is the property tax. Landlords who own properties worth more than €150,000 each will be faced with a property tax of at least €315 in a full year.
That is higher than the current two taxes they pay each year on those properties, the household charge of €100 and the second house charge of €200 each tax.
This year, landlords will have to pay the full €200 second home charge, also called the NPPR, as well as half the property tax. But next year the NPPR will be abolished.
"Given the NPPR was not tax deductible, it is not expected that the local property tax will be tax deductible – in effect, this means people are taxed on their tax payments," said Thalia O'Toole, associate director in KPMG.
The third hit facing some landlords is the increase in capital gains tax from 30pc to 33pc. This will affect those who are snapping up bargains in the recession and selling them off at a profit.
Irish Independent Supplement