Mortgage, rental property: to sell or continue as a landlord

Looking for advice please:
Employed in public sector
husband self employed

home mortgage 80k outstanding variable 2.5% rate value 350 k

rental property 179k outstanding on 2.75% rate purchase price 310k - update: probably around 300k
rented for 14 yrs, on low rate 1350 per /month stuck in rpz yield very low
(this is the property under FSPO investigation).

3 kids
Have some AVCs

Wondering if we should sell now, to pay off both mortgages. Won't be trading up again.
no shares / equity.

I probably make about 3-4 k net on rental income p.a. and not getting any hassle currently. Just afraid if new laws come in I won't be in a position to get out when I want to in the future.
We don't necessarily "need" to sell up now, just scarred from the crash, and afraid I'm "missing a trick" here with the sales market so strong...love to hear ideas / advice. neither of us have a financial background and are unsure of the best route ....just exploring options. TIA

S0@p0per@ said:

I probably make about 3-4 k net on rental income p.a.

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Your home mortgage is costing you €2k pa in interest payments.

Is €1-2k pa (the difference between the net, after-tax, profit on the renal and the interest cost of your home mortgage) sufficient reward for all the risk and hassle of running a residential letting business?

In your shoes, I would sell the rental, clear both mortgages and start aggressively contributing to your pensions.

What is FSPO investigation

If the property was originally priced at €310k, the optimum sale price is about €330k -So after you deduct selling costs, solicitors at both ends, etc, etc, you will have zero CGT to pay.

So, in effect, your next 30k capital appreciation is tax free. No guarantee it'll happen of course, and askaboutmoney policy doesn't allow speculation about property prices, but it's something to bear in mind.

Baby boomer said:

If the property was originally priced at €310k, the optimum sale price is about €330k -So after you deduct selling costs, solicitors at both ends, etc, etc, you will have zero CGT to pay.

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Peculiar logic here. I'd far prefer to get €430k and have to pay €33k in CGT than €330k and pay zero in CGT. Maybe it's just me.

T McGibney said:

Peculiar logic here. I'd far prefer to get €430k and have to pay €33k in CGT than €330k and pay zero in CGT. Maybe it's just me.

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It's a useful reference point.

OP can factor in that any gain up to €330k is tax free, any gain over that taxed at one third.

This kind of thing is relevant for an unstressed sale of a rental.

T McGibney said:

Peculiar logic here. I'd far prefer to get €430k and have to pay €33k in CGT than €330k and pay zero in CGT. Maybe it's just me.

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Sorry, I might have given a wrong impression here. I totally agree with your logic, and I'm very much in favour of keeping a performing BTL anyway. But when the OP has already declared a keen inclination to sell, then I think it makes sense to avail fully of the CGT-free headroom. But, yeah, I shouldn't have used the word "optimum" as it's a bit misleading.

keep a performing BTL , even in an uncertain small landlord environment?

S0@p0per@ said:

rental property 179k outstanding on 2.75% rate purchase price 310k - update: probably around 300k
rented for 14 yrs, on low rate 1350 per /month stuck in rpz yield very low

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So you have a net investment of €120k.

You are getting rent of €16,200
Your mortgage interest is: €5,000
Let's say expenses of €3,000
So you are getting profit before tax of €8,000
So a net profit after tax of €4,000

If you sell the property, you can pay the €80k off your home loan which will save you €2,000

So you are better off by a net of €2,000 by holding onto it.

The next €20,000 in growth above the current price is tax-free.

It really is a toss-up. If it were any hassle at all, I would say sell it. In fact, if the current tenants leave, I would probably say sell it. But while it manages itself, you should probably keep it.

There is a risk that the legislation may become even more anti-landlord. But, at some stage, the controls on rent may be relaxed. So the two risks balance each other out.

Brendan