(i.e. better sometimes to learn from losing 30K now to avoid losing 100K in the future) you should be able to learn from your experience and gain in future transactions.
Absolutely - this is how I am viewing it. Like I said, I'm not looking for sympathy, just alerting any potential naiive "investors" out there. I was in their shoes in 2004.......
I'm quite sanguine about the experience to be honest, harsh lessons are the best ones, once you make sure you learn from them.......
Bloody hell, the guy has just given a warning about the dangers of overseas property investment and here you go spouting the same nonsense that got him to invest there in the first place.Its unfortunate you need to sell as I reckon Budapest will pick up in a couple of years.
Look at http://www.worldsalaries.org/hungary.shtml you'll see the average annual salary is 1.9m HUF. At 17.5m HUF to sell the apartment, you are looking at 9 times annual income. Contrast this to Ireland where the average price is 400k odd in Dublin and the average salary is around 33k, 12 times annual income. That makes the apartment in Budapest a quarter cheaper than it might be in Dublin, but still well above the long-term EU median of 5 times salary for property prices. It is still out of reach for locals at those prices, unless it is a particularly good apartment. Many of the apartments that have been built/sold to foreign are not.
Now, lets look at demographics, important if you are thinking of the future value of your property. The population growth rate in Hungary is -0.253. That's right, there are fewer people willing to buy/rent your apartment each year. ([broken link removed]).
Edit: apologies, used monthly salary figures rather than annual. Now corrected. The figures look a lot less bad, but are still bad.
Second home and buy-to-let tax gift
The tax rate on profits from sales of holiday homes or buy-to-let investments has been slashed from as much as 40% to 18% from next April.
The move fuelled speculation at Westminster that Labour rushed out a 'botched' pre-Budget report in response to Conservative tax proposals.
There were further signs of disarray when Gordon Brown was humiliated by David Cameron in a Commons clash today.
The cut in capital gains tax announced by Alistair Darling yesterday was mainly aimed at increasing the tax paid by wealthy private equity bosses who currently enjoy a 10% rate.
But tax experts said it had inadvertently handed a major tax break to second home owners and will save them thousands of pounds when they sell. Andrew Goldstone, head of personal tax and estate planning law at Mishcon de Reya, said: 'It's a massive tax cut for property owners. Hardly what you'd expect from a Labour government.'
Owners pay CGT - a tax on the difference between the price they paid for an asset and the price they sell it for - on all homes except the one they live in. The rate is currently 40% for the first three years that the property is owned, falling by two% a year to a minimum rate of 24% after 10 years of ownership.
As well as hitting private equity bosses, Mr Darling's new flat rate of 18% is designed to simplify the system by bringing the rate for business and non-business assets such as holiday homes in line with each other.
Experts said the move looks certain to boost the property market next year, although it could mean a dramatic drying up of supply until April. Liam Bailey, head of residential research at Knight Frank, said: 'This will help underpin demand for second homes and prices of second homes. However, the second home market prices are very expensive in most parts of the UK and affordability is the key to demand.'
If you have another investment property that you sell in the future you may be able to offset the capital loss against it........ not too sure but I think so, something to check with an accountant if the time comes.
Unless they strike oil, the locals in Budapest are not going to be able to afford the prices that foreign suckers have paid/are continuing to pay for property in Budapest.
We are heading for a prague like boom for the next 5 years
Indeed, but many of these are 'family' properties (i.e. have been handed down). When I was in Balaton in the summer there were for sale prices everywhere and prices were on the slide. Now that Germany is reunified, many of the split German families (between east and west) no longer need to go to a third country to meet up, so a fair number of Germans are selling up.Most people I know own two apartments/holiday home by Lake Balaton, etc.
Well I do have an Irish property that CGT will apply to (thinking of selling in the coming year), but I had thought that losses from foreign properties could not be offset against Irish liabilities or does that just apply to rental income/losses?
No it was through an Irish company called hungarinvest. No longer trading! Personally I thought the apartment had/has a lot of charm, but I guess the older apartments are not that exciting for locals just now, particularly if the facade of the building is not good. Again it highlights the traps of applying Irish/Dublin criteria on appraising a property to an foreign market...I think your main issue is that you were sold an apartment which locals are not really interested in at an inflated price (possibly by CH?)
Some good news at lastBy the way, there won't be any legal fees as part of your sale
above you haven't included rent received so would that not have an impact on your 'true' loss? you do mention that the rent you received wasn't as much as you'd hoped but as you were interest only you say you did alright, so that obviously has an impact on the total investment
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