# Fairly good position already, now an unexpected windfall..



## billyben (4 Mar 2014)

Age: *31*
Spouse’s/Partner's age: *29*

Annual gross income from employment or profession: *€30,800* 
Annual gross income of spouse: *€30,700*

Monthly take-home pay: *Net pay approx. €2091 Partner €2000*

Type of employment: *IT / Finance* 

In general are you:
(a) spending more than you earn, or
(b) saving?
*Saving*

Rough estimate of value of home Renting
Amount outstanding on your mortgage: *N/A*
*What interest rate are you paying?*

Other borrowings – car loans/personal loans etc. *None*

Do you pay off your full credit card balance each month? *Yes by DD* 
If not, what is the balance on your credit card? 

Savings and investments: *€43,000* in BoI Investment funds, *€6,000* current account BOI
Partner has *€11,000* in savings account maybe a few quid else were. 

*We both have a combined regular savings of €350 a month*

Do you have a pension scheme? *No* Partner *Yes*

Do you own any investment or other property? *Yes* *worth about €220,000 approx. (will be getting it valued next week). *

Ages of children: *None*

Life insurance: *No*


*What specific question do you have or what issues are of concern to you?*

I planned to get engaged this year and also apply for a mortgage. (The various banks will lend us only 130k (to my girlfriend) as my job is a rolling 12 month contract) I hope to be made permanent this year bringing the potential amount we can borrow up to 277k but this is how it stands at the moment.

I was very fortunate recently and was gifted a vacant property worth around 220k by a relative more or less out of the blue, got the keys last week and have been doing a bit of clean up (painting, cleaning gutters, etc.) I considered moving in, but it’s far away from where we work and not in the best area, we also love where we rent at the moment.

My question is should I rent this property out? (as I work on contract might be a sensible income buffer although my job is fairly secure, although I have zero experience as a landlord) Or should I just sell it right away and use the cash to buy a house with a smallish mortgage. Or any other ideas, (I was told here are the keys do what you want) We were always good at having few quid saved, but am not used to something like this..   Many thanks,


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## 44brendan (4 Mar 2014)

Have you paid CGT on the transaction?


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## Nige (4 Mar 2014)

44brendan said:


> Have you paid CGT on the transaction?



don't you mean CAT?


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## ClaireM (4 Mar 2014)

44brendan said:


> Have you paid CGT on the transaction?



Do you mean CAT? He has no liability to CGT. If the donor paid CGT on the disposal he may be able to take a credit for it against any CAT liability.


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## billyben (4 Mar 2014)

No I havn't paid any CGT and I thought I am not liable for any CAT either as the value falls under the 225K tax free threshold between father and son gift tax. Is this not correct? I havn't signed the dotted line just yet but thought I will be over the next few weeks.. can anyone confirm the tax situation? Many thanks, and any suggestions regarding what I should do for future financial planning.. etc..


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## Brendan Burgess (4 Mar 2014)

If you owned a house mortgage free, would you borrow €220k to buy an investment property? 

The answer is probably not. So you should sell this property and buy the house you want to live in, in the place you want to live. 



> as I work on contract might be a sensible income buffer although my job is fairly secure



If you own your own home, you will have an "expenditure buffer" in that you won't have any mortgage to pay. 

If you get into financial trouble later, your family home will not be considered as means for the means test.  An investment property would be.  So you could get Jobseekers Allowance. 

You absolutely must do an agreement with your girlfriend about the purchase of the house so that it's clear in what proportion each of you own it, in case there is a dispute later.


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## amgd28 (4 Mar 2014)

Okay it wasn't clear it was a father-son transaction. You said "relative" in your original post so one would have assumed it to be someone other than a parent. In which case the tax-free threshold for CAT would be much lower.

From my reading of things if it is father to son then you have no CAT liability as it falls under the group threshold of 225k. 

This assumes you have not received any other significant gifts from your parents


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## billyben (5 Mar 2014)

Sorry AMDG28 I should have made it clear that it is a transaction between my father and I.. 

Thanks for the good advice brendan.


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## Bronte (5 Mar 2014)

Before I read this thread, at least it is an uplifting title.


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## 44brendan (5 Mar 2014)

My mistake on yesterday's posting. CGT instead of CAT


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## marathonic (7 Mar 2014)

Even if you wanted to get into property investing, it's probably better to sell the current property.

You could then buy your own home outright and look for an investment property offering the best yield as opposed to the one that happened to be gifted to you. 

When buying the property(ies) with the better yields, you can borrow against your residential property at residential rates and write 75% of interest off against rental income.

You would incur more transaction fees (estate agent, legal, stamp duty) this way but you would more than make this up through reduced income tax over the years. 

If the property is worth €220k for example, it may be better buying two €110k apartments. The rental from both is likely to exceed that of a single house and, should a tenant move out, you only have to do without 50% of the rent until you find another tenant.


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## RainyDay (8 Mar 2014)

Renting a property is really about running a small business. Do you want to run a small business, and is this the kind of business you want to run? 

If not, sell it.


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## ang1170 (9 Mar 2014)

Brendan Burgess said:


> If you owned a house mortgage free, would you borrow €220k to buy an investment property?


 
 I'd make a similar point: "if someone gave you €220k in cash, would you go out and buy an investment property?".

 My guess is it's probably the last thing you would do, which I suspect will answer your own question.


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