house, keep or sell?

J

JackB

Guest
I have a house worth 350k.
My mortage loan is 245k. Im thinking of borrowing 100k to upgrade.
Should I try keep the present home and rent it or sell it for the 350k?
I would like to keep it but what are the implications on stamp duty on present/future home etc if i do?
Also, will the 100k equity be enough to be able to buy my next home at 450k if i were to keep the present home?
I am a sole trader with an income of approx 80k. thanks
 
I'm in a similar situation and am seriously thinking of holding onto the first property. The main thing that will swing it for me however is tax relief on the the interest payments. I recall someone saying in some other thread that there is no tax relief on interest payments if the house was converted from a PPR to an investment?

Paying 42% (is it more?) on the rental income will definitely mean the rent earned will not pay the mortgage interest and if so I might be better sticking my money elsewhere.

Can someone enlighten me here with reference to something on the revenue site perhaps?

Noobie
 
If we ignore the current market for the mo. is it a better investment move to buy a new (as in not you PPR) house as investment rather than keep your existing and convert to an investment based mortgage?

The reason being that you get tax relief on rent for the new investment property but there is no tax relief for the remortage (excluding renovation etc. which realistically will be low as your PPR was hardly about to fall down) on your PPR?

Stamp duty is one thing I guess but as the purchase would be long term this is moot.

Opinions appreciated.

Noobie.
 
okay,

been reading some of the other threads and need clarification of the following.
Figures are for illustration only.

Current Mortgage 50K
Current House Value 100K
Change Current House (HouseA) to Investment mortgage of 80K
and use 'top-up' amount to buy a PPR elsewhere, or a holiday or whatever.

Are the following points now true (if possible back up with ref to some online resource):

  • Mortgage interest on the originally outstanding 50K is allowable against rental income.
  • Mortgage interest on the 30K 'top-up' (not used for anything to do with investment property for arguments sake) is not allowable?
Could my accountants advise here? What about revenue themselves? BTW How do they find out either way - an audit?

Thanks,

Noobie
 
You can only offset the interest on monies borrowed to"buy, improve or renovate" the investment property against the rental income so, in this case, it would only be the interest on the €50,000 balance. The relevant brochure on the revenue site detailing what can and can not be offset is it70.pdf

Sarah

www.rea.ie
 
Thanks for the confirmation Sarah.

Some follow on queries/observations.

If I up my residential mortgage prior to actually final 'topping up' to buy new PPR is this newly increased amount assessable for mortgage interest tax relief?

EG.

Now 50K of 100K oustanding
Increase to 60K or 100K outstanding
Later, do a 'top-up' to 70K when purchasing new PPR

Is interest on the 60K now allowable for tax relief? (Assuming the 60K is less than what was originally agreed when mortage was taken out).

Also,

as the rent-a-room scheme allows 7600 odd in tax free earnings it may be better to keep current house as PPR and new one as investment - yes I know you can't decide but seems crazy that one potentially gets more relief under the rent a room scheme than simply moving PPR.

On that note though couldnt one stay in current PPR and remortgage to but an investment property. Then rent out that investment property for say 1 year then do the switch of PPR? What percentage of mortgage would then be allowable?

Apologies if thats a bit confusing - typing fast to catch bus.

Cheers,

Noobie
 
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