Selling house - Cannot afford the payments anymore

F

Fenwayprk

Guest
We bought a new house in Galway 2 years ago for 275,000 euro. We have been renting the house for the last year as we moved to the US last year until early 2008 when we will move back home. We have now decided to sell the house as we cannot afford the payments anymore, the rent we receive only covers 62% of the mortgage. With the exchange rate it has been very tough financially for the last year.

ATM the current house value ranges in the 350k to 360k mark. We have decided to sell the house in ireland as my wife is pregnant and we want to buy a house here instead. Any money we make would help enormously with our expected new child on the way. We simply cannot afford having a house in ireland anymore.

Does anyone know if we are liable for stamp duty as we intend to transfer most of any money we make from the sale to help with the purchase of a new house here. If so what is the current rate?

Are we better of in talking to a financial advisor as it complicates things that we are living abroad. Any advise would be greatly appreciated.
 
you will be liable to capital gains tax on the gain ( difference between purchase and sale price ) less acceptable deductions.
 
Did you pay SD on the original purchase? If not then that liability is outstanding from the time the property was first rented out or when you first purchased it since it was not a PPR.
 
Something i don't understand in your post .... you want to sell in Ireland now (will take few months), buy in the States now (or in few months after you have sold in Ireland) , and are coming back to Ireland early 2008 .
Does that make economics sense in the MT/LT even though it may help you in the ST (for few months in 2007/early 2008)?
 
Fenwayprk said:
Does anyone know if we are liable for stamp duty as we intend to transfer most of any money we make from the sale to help with the purchase of a new house here. If so what is the current rate?

Are we better of in talking to a financial advisor as it complicates things that we are living abroad. Any advise would be greatly appreciated.
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The transfer of money has no impact on the SD issue. As mentioned above, you were liable for the full stamp duty payable (as an investor, so full rate) minus any stamp duty paid (you may have already paid the full SD, you may have paid none [as a FTB or under the 125sqm exemption - both of which no longer applied once you stopped being an Owner Occupier]).
The current rate doesn't matter. The rate you'd pay is dependant on when you purchased the property.

Yes. Definatly best to talk to an expert. Not really a Financial Advisor (or at least not one of the ones who focus on investments/pensions/mortgages) you're looking for, more a tax expert. Some financial advisors may be perfect for this, but you need one who can tell you of all your liabilities (e.g. the SD), what penalties/interest may also be due, etc.. Some accountants/tax experts may be in a better situation than some of the financial advisors, just be sure you get someone with the experience/knowledge you require.
 
Fenwayprk said:
We have now decided to sell the house as we cannot afford the payments anymore, the rent we receive only covers 62% of the mortgage. With the exchange rate it has been very tough financially for the last year.
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Have you considered going interest-only on your mortgage repayments until you come back in a year's time?

The transaction costs involved in selling in Ireland, buying in the US and selling and buying again in 2008 the other way around will be very significant, much more than any saving you would make on monthly repayments during this period.
 
Fenwayprk said:
the rent we receive only covers 62% of the mortgage...
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You may also have some income tax issues if that is how you calculate your taxable rental income. You may only deduct the mortgage interest element of your mortgage payments against rental income. As previous posters have pointed out you should speak to an advisor.
 
Quick word of correction of previous post: you are unlikely to be liable to any Capital Gains Tax. But do speak to an advisor asap.
 
Why not? They owned the property for two years, rented it for one and it was never a PPR as far as I can see. As such it seems to me that all of any resale gain is asessable for CGT. Unless there is some domicile/residency issue here?
 
amgd28 said:
Have you considered going interest-only on your mortgage repayments until you come back in a year's time?

The transaction costs involved in selling in Ireland, buying in the US and selling and buying again in 2008 the other way around will be very significant, much more than any saving you would make on monthly repayments during this period.
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For what its worth I think this is a very sensible option and a very good point.
 
ClubMan said:
Why not?...it was never a PPR as far as I can see.[\quote]

We don't know that. The OP is silent as to whether it was their PPR for the first year after purchase or not. Therefore whether CGT is payable is contingent on this issue.
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