Sell existing property or rent it out ?

I am looking for some advice. I bought a property two years ago. 215k is what's left oustanding and its valued at 280k.My situation is do I rent my existing property and buy another or sell and move on. I have seen places in the right location that I am interested in for between 450-500K.I could at a push keep my existing property and rent it out or just sell and take my profit and move on. What advice would you have ? what are all the costs involved in renting a property in my situation. Cheers

it depends on how much effort you're willing to put in to make your money..

remember that if you decide to rent it out, you will be liable for claw-back of stamp duty. Your rental profit will also be subject to tax, so you won't be seeing the full rental income as profit. Wear & tear and general hassle are also part and parcel of renting out a property so you need to factor that into your costs.
Also, if you are looking for a second mortgage, lending institutions will need to calculate your ability to repay the mortgage, so you may only get approx 70% of the second property's value...

all in all, you might be better off selling and buying a new PPR - therefore no tax liability. Read the key posts for detailed information on the pros and cons of selling or renting.

Claw-back of Stamp duty, can u elaborate on this ?

Only asking cos I was in a similar position and decided to rent out my existing property.

J

If you rent out a property within 5 years of buying it (as a ppr) you are liable for the stamp duty you would have paid if you had been an investor at the time of purchase. This catches many people unawares, if previous posts here are anything to go by. In response to the first poster - I was in a similar position last year but decided to sell, mostly because of where my house was - I didn't think it was a good rental area and I thought it was too risky to hold onto it. Renting out a house is a business - you have to work at it - and it can be very stressful to do this at the same time as buying a new place. Also remember you won't have as much money to spend on the new house if you are keeping the first one. So, if you are buying a new family home, maybe you'd be better off selling and using your equity to buy the best place possible. Keeping the first place and renting it could cost you money in the short term. Of course, if it's a fab penthouse right beside a Luas Stop with sitting tenants then ignore this advice...

This isn't advice, just what I'd do (and what I have done). Rent out existing property, re-mortgage to release as much as possible, which would probably be only 23,000 (85% LTV). Go interest-only on that mortgage, so your repayments should only be about 680 euro per month at 3.4%. Then buy new property using the savings that you presumably have (if you're looking for a house for 500k!) and the 23k from your re-mortgage. However, it means you will need 107k to put into your next house if you qualify for 80%. This includes 100k deposit, plus 30k stamp duty, minus 23k that you have from your existing property. Don't forget solicitors fees and moving costs too though! And tax on your rental income!

I guess this claw back of stamp duty is to put people off.Thank you all for some useful info .

darrend said:

I guess this claw back of stamp duty is to put people off.Thank you all for some useful info .

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why would a tax put you off , in that case you would not get out of bed each morning . the clawback is aimed at the property investor ,if you rent out your existing property and buy a new PPR you will become the "property investor"

I think its because I would have to come up with that extra 30K.Something a lot of people are not aware off "claw back of stamp duty".