Sell Rental or hold

R

regvw

Registered User
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Hi Everyone,
I'm looking for a little advice , like a lot of people I ended up being a landlord with a property I was stuck with on negative equity

Now with the Environment extremely difficult for landlords I am wondering if I should sell and if it makes any good financial since

The rental looks a bit like this
The house rents for €1,350 per month, its on a tracker mortgage currently paying €920 monthly with €125k left on the mortgage
The house is probably worth about €215k

We have a mortgage on our own home for €115k, house is worth about €400k and no other loans

The big question for me is if its worth teh efort of renting this one property and if I'd be better selling it and investing in something else or just paying my current mortgage with whatever I get from the sale

thanks Reg
 
Was in a very similar position as yourself - back in positive equity - in a RPZ - grossing c. E1.3k per month- recent lets for a similar property were grossing c. E1.8k per month - on a tracker on which repayments had increased by c. E400 per month - was having to fund tax payment of c. E6k per annum from salary . Given government/SF noises about freezing rents for 3 years and other measures that would just make being a landlord more difficult, I sold up last September... best of luck whatever you decide to do...
 
thanks for the replies. very similar situation to the bank manager above, though I did get the rent up to the correct rate ahead of a rpz coming in
I will look up the loan rates
 
In a system that is now stacked completely against the landlord it is difficult, now I would say also I have met some fantastic tenants but I feel the door is wide open for anyone to take advantage of land lords should they wish
 
Here’s a framework for approaching the decision.

Key Post - Keep Apartment as Rental or Sell?

Updated May 2020 The question regularly comes up on AAM whether somebody should keep an apartment that their family has outgrown as a rental or whether they should just sell up. Borrowers often run projections on the anticipated rental income from an apartment with a cheap tracker and conclude...
www.askaboutmoney.com

Given the direction of mortgage rates in recent years, I strongly suspect that you would be better off selling the rental and paying down the home mortgage.
 
EUR5,160/annum after the mortgage is paid up. Take off another EUR1,000 for property tax & expenses = 4,160.

Take off say 33% for income tax = ~EUR2,745 to you at the end of the year.

Sell it & release ~EUR100k in equity & put it to work either paying off your home mortgage or investment.

I'd sell in your shoes.
 
Horatio said:
EUR5,160/annum after the mortgage is paid up. Take off another EUR1,000 for property tax & expenses = 4,160.
Click to expand...
That’s not the correct way to calculate net taxable rental profits.

You only deduct allowable interest - not principal repayments.

So, if the tracker rate was ECB+1%, you would only deduct €6,875 (€[email protected]%) in allowable interest, plus other allowable expenses, in arriving at your net taxable profits..

Oh, and LTP is not a deductible expense - that comes off the post-income tax figure.
 
Most likely no CGT on the rental as I suspect it was bought in the tiger years.

I'd sell, pay off the current mortgage and then put as much 40% taxed income into a pension and look forward to an extremely comfortable retirement in future years.
 
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