D12 investment property - sell or keep

C

Ciaran762

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Hi,

Have a house in Drimnagh with 6 years left on mortgage, current tenants leave in few weeks . What do people think are benefits of :
1. sell - AVC on pension,, reduce main mortgage invest, put cash aside for kids college (in 2 years time all going well)
2. keep - rent out again - RPZ so rent is restricted...could rent by the room and increase yield significantly.

Costs us around €4k in tax per annum.

Not sure the asset is going to appreciate much more but equally if I take the cash with no particular plan is this foolish?

Appreciate your views please
 
What rent are you currently getting (“renting by the room” doesn’t avoid the RPZ restrictions)?

What rate are you paying on the rental mortgage? How much is outstanding?

What are your other (average) costs for maintaining the rental?

Are you paying income tax at the higher rate?

How much would the rental realise on a sale? How much did you pay for it (ie would you make a taxable gain on a sale?).

What rate are you paying on your PPR mortgage and what is the outstanding balance?
 
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Was it your main residence before it became a rental property?
If so, when did it become a rental property?

This will determine the taxable gain.

If you had it as a main residence for 14 years and rented it for 6 years, then only 25% of the gain is taxable (14 years +1).
If you rent it for another 5 years, then 40% of the gain is taxable and it continues to increase.

Assuming you are paying high rate tax, I'd look at increasing pension payments from salary and drip feed an equivalent amount from the sale of the house into your everyday spending - EG - put 2.5k into pension each month. That's a net income loss of about €1200. Transfer that 1200 from a savings account holding the house proceeds. Spending budget stays the same, but pension accumulation is substantially higher
 
Would your kids use it for college? If so, it could potentially be their PPR and then they can benefit from rent a room. So instead of you paying rent for them to live somewhere else, you continue to pay the mortgage and your kids get a tax free gift of free housing if they meet the criteria (<25 and in full time course) and then they benefit from whatever rent they can earn from it, which can then cover their living costs. Worth looking at this angle.

Not sure what you would do with it in the interim to ensure you would have vacant possession for your kids? Maybe see if you could do a corporate let or someone here for a fixed period of time eg PHD student, traineeship etc.
 
for any big decision like this, you really should provide all the information required for a MoneyMakeover. It is dangerous answering questions in isolation.

Key Post - Basic information required for the "Money Makeover" forum

It can be difficult, but please try to use a meaningful title in your thread For example "27 year old with mortgage arrears". You will get a much better and much more coherent answer if you give as much information as possible in your first post. For example, if you give your mortgage rate, it...
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