Section 50 Investment Query

A

AABM Fan

Guest
I'm a big AAM fan...this is my first post!!
Would someone be able to provide information on a Section 50 investment I am looking at.
The apartment is 275k. I am thinking of remortgaging my own house for 75k and taking a new mortgage for 210k (to cover the cost of the mortgage and stamp duty).
The Estate Agent told me that there is 186k left over the next 8 years left on the tax relief part because it is a Section 50 (I don't really understand what this means).
The rental on the apt. is EUR975 per month and an annual management fee of approximately EUR1500.
Does anyone know how this will affect me tax-wise?
Both my husband and I are in full-time employment and taxed at the higher rate.
Thanks,
AABM Fan
 
The rent you receive will not come near to covering the cost of the mortgage. Section 50 is only useful if you need to offset rental income from other properties to avoid income tax. If you don't have other investment properties which are creating good cash flow then it would not be wise to invest in this property that will loose at least 500 to 600 euro per month.
 
Thanks for that doberden. I'm looking at is as a long term investment, so don't mind short term pain for hopefully long term gain!!
Do you know if I were to go without a TAX incentive investment, do I pay tax on the entire rental income received?
 
You get tax relief on any interest you pay and you can also offset expenses and furniture (written off over several years).

Example:

Rent Year 1 = 10,000
Less Interest = 5,000
Furniture allowance = 1,000
Rental Management = 1,000
Misc Expenses/reparis etc = 1,000
Profit = 2,000 ...this is what you would be taxed on.
 
That's really good to know. I'm only learning this whole investment process thing!! I didn't know that if the management company is charging EUR1500 per annum, this can be deducted from profits....Thanks!
 
You must log in or register to reply here.
Back
Top