evil landlords

A common tax myth about landlords

A tax myth that I have heard more than once has to do with landlords somehow price-gouging because they have a debt free property.

Most recently it was written in the Independent where it was stated by Aideen Hayden of Threshold accused landlords of ‘downright extortion’ because they have increased rents at a time when they have no mortgage on the property.

This is a logical fallacy, and a one worth debunking.

For a start, everybody has the right to charge prices and equally the state has a right to tax profits from various activities. In the case of landlords they have to make a tax return stating their profits and the more they make the more tax they pay.

In fact, the effective rate of tax on a landlords net profits is often about 65% or more. Don’t believe me? Play with this excel calculator and see for yourself. If you want to see how it works for a person who is mortgage …

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Smart Money

Cheapest credit card that almost anybody can qualify for

Credit cards often have an interest rate of 20% or more and the do offer some great convenience and flexibility, but for many people this credit contract can be a problem and the high interest rate doesn’t help. So is there a way to cut that interest rate in half?

The short answer is ‘yes’, within consumer credit there are different types of contract, ‘credit’ can take the form of credit cards, overdrafts or even hire purchase agreements.

So here’s what to do, most people have a debit card with a current account, what a credit card does is give you a time where you pay no interest and can spend money you may or may not have.

If you get an overdraft (say for €5,000 which is a common credit limit on a credit card) instead and just use a debit card with it then you can access that €5,000 in the same way a card might do. If you have money obviously your balance will go to zero before you hit the overdraft so if you always pay …

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Buffet on staying out of debt

When one of the best investors the world has ever known says you should stay out of debt it might be worth listening to! We are advocates of keeping debt as low as possible, this involves financial habits and life habits that lead to financial success. Enjoy the video, the words of this video are full of wisdom.

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Highland Radio: Discussing the TUI with Karl Deeter

Normally we don’t get asked to discuss matters outside of mortgages and property, but on this occasion we did so on Highland Radio in Donegal. The topic was teacher pay and that the TUI were rejecting the offer being made, our view is that no such offer is likely required at all and that it would be far better to have a full reformation of the teaching year because all other aspects of the debate are largely a false argument.

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Negative income tax

The idea of a ‘universal income’ or ‘negative income tax’ is a proposal that gives people a certain amount of money instead of giving them welfare. It takes everybody and treats them the same, a negative income tax applies a tax rate to a persons situation and depending on your income you either pay tax or receive a top up.

It’s important to note that the ‘minimum’ is not the same as ‘making equal to’ the point at which you start to pay tax. It’s an interesting idea but one which may have practical challenges if implemented.

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Newstalk: Shane Coleman & Karl Deeter discuss Rent Control, or ‘rent certainty’

Yesterday on Newstalk’s Breakfast show Shane Coleman spoke to Karl Deeter of Irish Mortgage Brokers about rent controls and what effects they may have, it is also becoming known as ‘rent certainty’ which is a more politically correct version of the same expression.

Germans have struggled to make this workable, as have the French, these markets are also heralded as the markets we should aim to replicate, but why would we want their problems when we have problems of our own already?

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Drivetime RTE: Mary Wilson speaks to us about mortgage rates, 22nd May 2015

We spoke with Mary Wilson of Drivetime on RTE about mortgage rates and what the implications were of the changes Michael Noonan (Irish Minister of Finance) announced that day. We also read through the Central Bank report on the subject and considered the findings of their analysis in terms of the impact it might have on borrowers.

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Newstalk: Pat Kenny Show on variable rates

We were asked to speak with Pat Kenny today about variable rates and the government plan to intervene to make banks drop them. This was, after considering various pieces of evidence shown to be a deeply political rather than pragmatic move. We also demonstrated that there are documents which the Minister for Finance had drafted up with the banks specifically stating that he would not intervene on matters of pricing, the recent round of ‘meetings’ is in direct contravention of that.

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Central bank rate cut will lead to more credit

Drop rates so banks can lend more…

In the ongoing variable rates pricing fracas there are many points being overlooked. The first is why our mortgage rates are higher than other European countries, but we should just ignore that – at least to stay popular.

We’ll say that the government/Central Bank pressure works and banks drop their rates, what next?

We might get around to the greater number of people under price pressure for housing (the renters), but that’s unlikely, instead we’ll inadvertently drive up house prices a little more by making credit more easily available.

Because the lower the variable rate the lower the stress test. Lower rates equals more credit, it’s a fact of life in lending.

You heard it here first. The lower variable rates go the more it frees up a persons lending capability. We have covered the way the Central Bank lending rules won’t work to the point of being annoying (and we weren’t alone, the ESRI and …

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apples and oranges

SVR’s: Comparing apples to oranges is bananas

The ongoing meme of standard variable rates being a ‘rip off’ has recently lead to a new bill being proposed by Senator Feargal Quinn. This is the most recent brainwave since the ‘tax banks to make them cut rates‘ idea.

Once again we see the politicisation of credit pricing which is avoiding many of the contingent facts on the topic which analytically is an error.

My old statistics lecturer used to say ‘comparing apples to oranges is banana’s’ and she was right, to compare two things they need more ‘likeness’ than the fact that both things happen to exist.

Here is a small list of things that occur in other jurisdictions that aren’t being mentioned.

1. Arrangement fees: Many jurisdictions (even around Europe) have arrangement fees factored into the loan, often this is 1% that the borrower pays the financial institution for setting the loan up. This reduces the need to amortize the cost of procurement …

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