Agree, but you can write off expenses b4 calculating the tax you pay, like mortgage interest, insurance, any repairs on house, etc etc€15,000 and you will get only €1,000 rent tax credit for the rent you pay.
Agree, but you can write off expenses b4 calculating the tax you pay, like mortgage interest, insurance, any repairs on house, etc etc
In fairness, even if he does make 15k a year after paying tax, mortgage is 9600 a year, thats still a profit of 5,400 a year.. not bad eh, plus tenants paying off the mortgage
Little confused, you say profit after tax is 9k, but then you say profit by keeping it is 3k? Which is it?Profit after tax €9k
You are also forgetting that he is also paying off the mortgage, at the end he will have an asset worth 350k..
Sure you can write off expenses but you have to pay out expenses.Agree, but you can write off expenses b4 calculating the tax you pay, like mortgage interest, insurance, any repairs on house, etc etc
In fairness, even if he does make 15k a year after paying tax, mortgage is 9600 a year, thats still a profit of 5,400 a year.. not bad eh, plus tenants paying off the mortgage
BUT a big concern of mine is potentially not being able to sell without tenants in situ.. if that comes in were done for!
Still havent decided whether Im gonna sell mine this year or not, based solely on the above..
I wonder if they do decide you to implement such a law, would you have time to sell before it comes into effect? or is this something that they could introduce overnight?
Yes you do, but the bottom line is is he is still making a profit on the rental..Sure you can write off expenses but you have to pay out expenses.
You pay out say 2k for repairs. You claim back the 2k and roughly get half your 2k back.
Not sure what your point is
Your assuming they are all investment properties and assuming 100% borrowed.I am just pointing out that your argument that he is better off keeping it because he will have a property at the end of it is incorrect reasoning.
It's quite hard to explain but I will try by exaggerating the issues.
Case 1
Let's say that your bank offers you a 100% mortgage to buy an investment property.
So you borrow €300k to buy a property worth €300k.
You agree to repay capital of €30k each year for 10 years - just to keep it simple.
The interest rate is 20% or €60k in the first year.
The rent is €20k a year.
By your reasoning, this is a fine investment as he will own the property after 10 years!
Case 2
The bank gives you a €300k mortgage to buy a €300k property. This time it is interest only and so at the end of the 10 years, you still owe €300k.
The rent is €30k a year.
The interest is 3% so about €9k a year.
By your reasoning, this is a terrible investment, because he does not own the property at the end of 10 years.
I still dont understand why, your missing out on a big nest egg when you retire, of course it should be a part of the decision.Hi Colin
I am simply pointing out that including the capital repayments on the mortgage is irrelevant to the decision.
Brendan
You are also forgetting that he is also paying off the mortgage, at the end he will have an asset worth 350k..
It MUST form part of the decision, taking everything into consideration you could make money on it, especially since property prices have been going up for years..This is simply wrong. I have tried to explain it three times. Maybe someone else can explain it better than I can.
You are also forgetting that he is also paying off the mortgage, at the end he will have an asset worth 350k..
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