# Nearly 50 and want to work less



## Cameo (30 Sep 2019)

Combined family paye income of about 260k or so 

three kids, (9 to 14) so outgoings will remain high but no private school fees planned, childcare of about 500 per month currently 

Almost no mortgage on our primary residence, will be paid off in next 6 months

Three Dublin properties rented, Approx. value, 500k, 300k and 225k. Rent per month of 2100, 1500 and 1500 respectively. All solid properties in term of rental demand 

The 500k property has about 150k loan outstanding on ecb plus 0.5%

One other loan of 100k, interest free 

No other loans or finance etc

Usually have a cash balance of 20k or so

No shares held directly, still waiting for the crash...

pension

Me
Deferred DB of c. 6k pa payable from age 60
DC pots of around 550k

I’ll be 50 in a year.

Spouse
Deferred pension of 10k from age 65

Dc pots of 100k

currently plan to continue working but looking to reduce outgoings and work less or maybe one of us give up or start contracting and alternate taking time out

Plans are. Sell 500k property(3 bed semi with garage and west facing garden in d16) and buy a cheaper property using the balance to pay off the mortgage, rental income should drop a small bit but probably not hugely

In a years time take 25% tax free cash and use it to pay off 100k loan 

So in one years time be debt free and have rental income of approx 60k pa.and arf, marf of 400k

Life cover of c. 600k but no phi or critical illness

Will max out pension contributions if money continues to be earned

I don’t like the idea of being so concentrated in property but yield is attractive relative to anything else going. It’s not very tax efficient either as all just held directly 

Any thoughts of alternatives to property or how to maximize income?


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## Andrew365 (1 Oct 2019)

Can you go part time in your current role? When you say go contracting what sector? Sometimes contracting just means working longer hours for a shorter amount of time i.e. a 3 month contract rather than contracting 2/3 days a week. 

My rule of thumb is if you are spending your monthly salary you can't afford it. If you take your salary and take a 1/5th of it to represent going to a 4 day week, if you can live of that you should be grand.


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## Easel (1 Oct 2019)

Congrats on being in such a healthy position at 49.

How much is your PPR worth?

Your plan to sell the 500k property to purchase a cheaper one does not make much sense to me as you have a very cheap tracker on it and the transaction costs between buying & selling will be about 20k. You will also have void periods where you will have no rent coming in during the process.

Is there any CGT due on any of the rentals?

What are your household monthly expenses like?


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## Cameo (1 Oct 2019)

Andrew365 said:


> Can you go part time in your current role? When you say go contracting what sector? Sometimes contracting just means working longer hours for a shorter amount of time i.e. a 3 month contract rather than contracting 2/3 days a week.
> 
> My rule of thumb is if you are spending your monthly salary you can't afford it. If you take your salary and take a 1/5th of it to represent going to a 4 day week, if you can live of that you should be grand.


potentially could go part time and that would be preferred option for now. 
i work in finance sector and when I mean contract I mean short term contract 3 to 12 months and take time out between contracts

should be able to afford 60% of my salary spouse already works 4 day week


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## Cameo (1 Oct 2019)

Easel said:


> Congrats on being in such a healthy position at 49.
> 
> How much is your PPR worth?
> 
> ...



PPR probably 800k + 
tracker is good provided I want to continue repaying 1300 a month, kind of like saving 1300 per month but not tax efficient. can afford to max my pension  and make repayments currently but maybe only one if earning less

cgt on all properties but not huge 500k one was ppr previously

not really sure of monthly outgoings but a lot goes on pensions(4000plus, gross) and paying off two loans(3800) currently 

running costs on house would be high large property and gardens


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## moneymakeover (4 Oct 2019)

Question about your 60k rental income when you're debt free

That will create a tax bill of say 25k?

Do you have any ideas for how to reduce the tax bill?

You will have to take the rent and put half to the side for the tax man. Maybe you already do this.


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## Cameo (4 Oct 2019)

moneymakeover said:


> Question about your 60k rental income when you're debt free
> 
> That will create a tax bill of say 25k?
> 
> ...



I’ve no ideas how to reduce the tax bill, that’s really the key point about current investment. property yield is ok now relative to other asset classes but it’s terribly tax efficient, i do pay lots of tax on the rental income currently and this will continue as long as the properties are rented. Would be much better within a pension wrapper but they’re not unfortunately.

Which is making me think, can you transfer a property into pension fund and then an ARF. No tax relief but at least I could reduce the tax on the income until I absolutely need it?


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## moneymakeover (5 Oct 2019)

I agree completely

The only consolation upon retirement is the income tax hopefully drops

A couple can earn 36k before hitting the tax net and then some more before hitting high rate.

But meanwhile you have 10 years paying government 25k of your rental income.

One suggestion is, before retirement, to renovate the properties. The cost can be offset against tax.
The increase in value will allow you to increase the rental income (and tax unfortunately).


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## Cameo (6 Oct 2019)

moneymakeover said:


> I agree completely
> 
> The only consolation upon retirement is the income tax hopefully drops
> 
> ...



Thanks for the advice, I suppose not having the properties in a pension fund give me some extra flexibility of not being in a pension but it’s costing me a lot in tax


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