Asset rich, cash poor....

G

gerryjohn

Guest
I have recently built a house that has now become our primary residence.
My mortgage €150,000 costing €900 per month. We are currently renting our old house for €800 a month and the mortgage is €600 a month with an outstanding balance of €80,000 over 16 years & a value of €330,000.
I'm cash strapped at the end of each month and am wondering should we
(1) sell the house within 12 months to avoid CGT and clear our home mortgage & invest the remaining money, (2) remortgage the old house with an interest only mortgage to clear the debt on the family home.
Could we claim tax relief on rental income against the new mortgage?
Any advise welcome...
 
gerryjohn said:
We are currently renting our old house for €800 a month
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Gross or net (of tax and expenses)?
remortgage the old house with an interest only mortgage to clear the debt on the family home.
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How would that help? You would just be substituting a loand secured on one property for one secured on another property (and possibly at higher rates if the lender charges a premium for investment property mortgages)?
Could we claim tax relief on rental income against the new mortgage?
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No. You can only offset interest on a loan used to purchase/renovate an investment property against rental income.
 
your monthly repayments seem very high for just 150,000. why not look into switching?
 
Are you strapped for cash because you have other personal loans in place (e.g. car loans), credit card bills etc. This is where I would start first.
 
I agree, Do you have any other personal loans or debts that you are having difficulty repaying.

Capital Gains Tax is only paid on the gain from when the old house became an investment property.

Renting old house for €800p/m against a mortgage of €600p/m.
Tax relief on rental income is only available on the interest portion of the loan on the old house.

Current Mortgage of €150,000 paying €900p/m

If you have problems paying this loan the best thing to do is to speak with an independent financial advisor and discuss it in more detail.

Paraic@obrienfinlay.ie
 
Capital Gains Tax is only paid on the gain from when the old house became an investment property.
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Not true.

CGT is payable on the pro-rata on the whole gain for the period of investment property less 12 months/total ownership period, as the original post clearly indicates
 
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