Investment Advice

M

MarkS

Guest
Current property worth 535k with mortgage of 180k. Looking at investment property in Cork worth 400k. Can put down 90k against it. Joint earnings of 130k.

While this is an investment we are looking at relocating to Cork within two years. Not sure whether we will then sell our current property.

Is investment in the Irish property market a good idea or would we be better investing elsewhere. Any advice would be welcome.
 
You are in a good financial position to purchase the property you refer to. IMO, put as little of your own money into the investment property as possible-you can write of the interest against rental profit, in the express hope of making no profit nad therefore paying no income tax. Always hold on to your cash if at all possible. Alternatively put it against your Mortgage, where you get the benifet in your pocket immediately.
As you have substantial equity in your PPR, and good income, it should be easy to get an interest only loan for 90% (or more) of the purchase price in Cork. Its also more tax efficient to go interest only-and it improves your cash flow to pay a big loan.
However you will incur stamp duty on the purchase, whether the house is new or second hand. This is not refunded if you make the new home your PPR in time, as you possibly indcate. If its your intention to relocate, and want to live in a new house, the best thing to do is to buy another property in Cork at that time. This recomendation only applies if the house is new, and under 125m2 (the stamp duty threshold for new property).
Sell the house in Dublin, without incuring a liability for CGT. If you rent the property in Dublin you will loose your exemption from CGT on any gain in the value of the property after a period of 12months of it being rented out.

Hope that helps somewhat, there are lots of discussions here on renting out PPR, CGT etc.
 
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