Own a house with rooms rented, want my own place

O

Oregan

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I'm 34 years old, salary of €48k and I own my own 4 bed house in Dublin worth around €320k with no outstanding mortgage. I have two of the rooms rented out and receive a yearly income of around 9k on that under the rent a room scheme. I've done this for years now and have savings of around €30k, earning very little intrest. I'm at the stage now where I'm pretty fed up sharing with other people and want to live alone, so I'm trying to figure out what's the best way to do things. My options as I see them are as follows:

Kick my room renters out and have the place to myself. Makes the most sense, but it’s a big old house and would feel very empty and wasteful there alone. I'd much prefer a small apartment to myself.

Buy an apartment for myself for around €170k and rent the entire house out for about €2500 per month. I will pay full tax on the house rental though as i dont have a mortgage. Then when i eventually move back into the house I can rent the apartment out.

See if I can release equity in the house, thus creating mortgage (and I could then get interest relief on the mortgage when I rent it) and then use this money to buy an apartment. Is this even possible?

Rent the house out and use the after tax money to rent an apartment.

Is there anything else I should consider? I know I'm in a great position but I'm just weighing up my options at the moment. Would appreciate opinions. I don’t really want to sell the house as if I eventually settle down it would be a nice house to raise kids in.
 
Oregan said:
See if I can release equity in the house, thus creating mortgage (and I could then get interest relief on the mortgage when I rent it)
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This would not qualify for tax relief. A loan only qualifies for tax relief if its purpose is to buy the property being rented. The purpose of this loan is to buy the apartment so that would not qualify.

It doesn't make financial sense to rent out the house and rent an apartment for yourself.

You would get €1,250 in rent after tax. You would not be able to rent a suitable apartment in Dublin for that.

It probably doesn't make any other sense either. You could have hassle with your tenants and with your landlord.

So just live on your own in the house as you can afford to.

Alternatively, sell the house and buy a more suitable place.

Brendan
 
"See if I can release equity in the house, thus creating mortgage (and I could then get interest relief on the mortgage when I rent it) and then use this money to buy an apartment. Is this even possible?"
This isn't possible as to be allowable the loan must be for the "purchase, improvement or repair" of the premises, so funding another property purchase would not allow you do deduct the loan interest.

Post crossed with Brendan's.
 
Brendan that's pretty much what I thought. Will just stay there alone and hopefully grow into it.

Thanks for the advice.
 
Could you build a "granny flat" onto the house, or subdivide the house in some way. Thus your rent a roomers would become neighbours rather than sharers.
 
cremeegg said:
Could you build a "granny flat" onto the house, or subdivide the house in some way. Thus your rent a roomers would become neighbours rather than sharers.
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Then its not rent-a-room any more. The tax exemption applies only to shared accommodation, not subdivisions.
 
Depends what's most important. Another solution perhaps is part time renters. Students for example or part time workers? Airbnb perhaps?

Rent out from Monday to Friday's, specify no weekends. Students won't be there during holiday periods when you might be. Achieves some of your objectives perhaps. Give you sole occupation when you're likely to be there the most and also continues to generate some income. Can you also rejig the rooms so that they have a separate living room? Also have some kitchen rules. Eg students or renters get a time slot. This was a very common approach in digs when I was in college.

Agree buying apt makes no sense.
 
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Oregan said:
I own my own 4 bed house in Dublin worth around €320k
...
Savings 30k
...
Buy an apartment for myself for around €170k
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Let's flip the situation around:
Imagine you owned an apartment worth 170k, you have 180k in cash/mortgage, and mortgage interest relief for BTL doesn't exist.
Would you buy a 320k 4 bed BTL?
If not, then you should be selling.
 
Of course you should not be selling.

There are significant transaction costs to buying and selling a house. Also if you sell, you may never again be in a position to buy a similar house.
 
Oregan, I'll tell you one thing - I would love to have your problems if your post contains the only problems you have. At this moment you are onto a winner, laughing all the way to the bank and it appears you will never see a poor day. I would have no problem inheriting money problems like yours. You're ahead, so stay ahead. Don't do anything daft and you are the kind of guy of which we would be asking such investment financial questions, not answering them.

With respect, you are the guy in such a happy marriage that you can't believe yours and your wife's good fortune, so you go to marriage counsellors asking why are you so happy, but for some reason you want to come away unhappy.

. . . and believe me there are some financial advisors in whom you could place your trust and it is likely having taken their advice you will be all the poorer financially.
 
Leper said:
. . . and believe me there are some financial advisors in whom you could place your trust and it is likely having taken their advice you will be all the poorer financially.
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I could give your their contact details if you like.
 
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