Should We Sell Holiday Our Home?

My husband and myself bought a holiday home in West Cork about 5 years ago. Our mortgage on it is manageable for us. We still have a relatively small mortgage on our family home as well. We can afford the holiday home mortgage without much difficulty even though we could do other things with the money probably.

My question is should we think about selling it ( in the present climate) in case it loses a lot more value in the future or should we hold on to it? If we could get a buyer (it's in a fairly sought after area) we'd make some money though capital gains tax etc. would lessen the profit. Or should we hold onto it? We don't rent it out and we can afford to hold onto it. Would we be foolish selling it at the moment? Should we hold onto it in the hope that the market will recover and that it will regain a good bit of its value in the future? Thanks.

You can afford it. I presume you use it and enjoy it. In such a situation, I think it would be a mistake to let guesses about property values influence your behaviour.

Mebs said:

My husband and myself bought a holiday home in West Cork about 5 years ago. Our mortgage on it is manageable for us. We still have a relatively small mortgage on our family home as well. We can afford the holiday home mortgage without much difficulty even though we could do other things with the money probably.

My question is should we think about selling it ( in the present climate) in case it loses a lot more value in the future or should we hold on to it? If we could get a buyer (it's in a fairly sought after area) we'd make some money though capital gains tax etc. would lessen the profit. Or should we hold onto it? We don't rent it out and we can afford to hold onto it. Would we be foolish selling it at the moment? Should we hold onto it in the hope that the market will recover and that it will regain a good bit of its value in the future? Thanks.

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If you could make money I would sell now honestly sure they might even hike capital gains soon to broaden the tax base otherwise there will at least be extra or increased property taxes possibly in Dec otherwise next time if they dont have the balls right now. You could always but somewhere cheaper in the same area for a lot less and factor in how much youre willing to pay for this then when there are extra expenses like the ones above...

Mebs said:

My husband and myself bought a holiday home in West Cork about 5 years ago.

If we could get a buyer (it's in a fairly sought after area) we'd make some money though capital gains tax etc. would lessen the profit.

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Like everywhere else, it can take years to sell property in West Cork. Maybe you would have to set your price lower than you think.
I have seen unoccupied properties there and they seem to have been up for sale for an eternity.

Mebs said:

My question is should we think about selling it ( in the present climate) in case it loses a lot more value in the future or should we hold on to it?

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A few figures is probably whats required here for further opinions.

What type of interest rate you are on? - Tracker, fixed, variable

What % interest?

Purchase value, outstanding amount on mortgage, current value?

How many years left to pay off mortgage?

Income, outgoings?

Perhaps you could fill out the standard form on AAM.

If you use it as a holiday home and can afford it then why would you think of selling?

Of course, if you bought it with the intention of selling and making a profit then your question as to whether to sell or not is justified.
If this is the case, I would hold on to it and keep paying down the mortgage in the hope that values will rise in the future (hope I'm not breaching guidlines here).
The fact that you can use it in the meantime would add more value to this approach.

This is not a financial decision. Or, more correctly, not primarily a financial decision.

A holiday home is a luxury. It seems to me that you can well afford this luxury.

If you can no longer afford it, then sell it.
If you are no longer using it, then sell it.

As PadraigB points out,

I think it would be a mistake to let guesses about property values influence your behaviour.

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It is not really relevant that CGT might rise in the Budget, because you will not have a contract for sale by then so you will be paying the higher CGT rate anyway.

Thank you all for replies. You all make sense individually. I'll try to answer your questions.

Bought 6 years ago for about €170k. Mortgage of about €700 per month. 20 year term. Variable rate. Not sure what the outstanding amount is but I think its around €90k+. (Only about 3 years to go on our own home mortgage of about €300 per month). Combined income of around €120k p.a. gross. Haven't calculated outgoings but as I said, we can manage the payments fairly comfortably at present.

A few years ago we would have expected to get €300k+ for it but there isn't much movement in the property market there at the moment. What would it make now......? If we had 2 interested parties we'd hope for 250k but 225k might be more realistic. But we wouldn't want to 'give it away' either.

We don't use it as much has we thought we might. Bought it with a view to using it as a holiday home but also as an investment that we might sell on again.

Good point Brendan about the cgt but I had thought of that.

But honestly, if they really hiked cgt in the budget I think we would just hold onto it and will it to our children. Maybe we should think about renting it during the summer months. Even in the present market we could realistically hope to get about 6 weeks at around €600 per week as our friends in the area get.

Any other observations or advice would be welcome. And thanks for advising me up to now and not lecturing me.

Do you use it? Do you rent it out?

I think the risk of higher costs in the future would make me think of selling it.
1. CGT
2. Interest rates
3. Property tax
4. Carbon tax making it more expensive to go there

corkgal said:

Do you use it? Do you rent it out?

I think the risk of higher costs in the future would make me think of selling it.
1. CGT
2. Interest rates
3. Property tax
4. Carbon tax making it more expensive to go there

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I agree. You just dont know what the government are going to slap on to property next. Get rid while you can.
No person in their right mind would invest in property in Ireland now. The govt have just screwed everyone who ever bought an investment property.
Essentially they have scared even foreign investors away, at a time when property price might be looking like it could be worth doing again, the government are being very stupid

You have to remember that we have been in a property bubble for the previous few years. That means we would need another bubble for your property to "recover" in value.

By all means put the property up for sale to see what you can get, but it is quite possible you will be unable to sell it for the price you are seeking.

However, I agree with the other posters. I don't really think this is a financial issue; I think you are just worried that the property market is in trouble so you feel the need to be doing something.

When did you originally plan on selling it on again?

Mebs said:

Bought 6 years ago for about €170k. Mortgage of about €700 per month. 20 year term. Variable rate. Not sure what the outstanding amount is but I think its around €90k+.

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This seems unlikely, unless you've paid a significant lump sum at some stage.

From an investment point you may want to re-examine your numbers. How much interest have you paid the bank so far, have you made any income on the property?

Howitzer said:

This seems unlikely, unless you've paid a significant lump sum at some stage.

From an investment point you may want to re-examine your numbers. How much interest have you paid the bank so far, have you made any income on the property?

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Yeah, we inherited some money a number of years ago (not mega bucks) and were able to use a good chunk of it when buying the house. I haven't done a tot on the amount of interest paid to date. But at the time it was more about buying a holiday home and less about investment as such. As I posted earlier, we haven't ever rented it out but we could probably get around 6 weeks if we put our minds to it. We don't use it as much as we thought we would so not having access to it during the summer wouldn't be a big deal.

UFC, we hadn't any date in mind as to when we might sell the house but I think you're right that given the way the market is going now it's on my mind a lot more. I suppose that's why I posted here really. It's a great site for something like this.

Not using it
Not renting it out to cover costs
Falling in value
Costs rising sharply
I'd sell it

i would keep it, no one is going to buy it at present and you appear well able to afford it, you should seriously think about renting it out when you are not using it, you could get €300 a week minimun, more people will be holidaying at home so there is a market there, you have only got 3 years to go on your main mortgage so that will free up cash for you

How often do you get to use it?

rosemartin said:

i would keep it, no one is going to buy it at present and you appear well able to afford it, you should seriously think about renting it out when you are not using it, you could get €300 a week minimun, more people will be holidaying at home so there is a market there, you have only got 3 years to go on your main mortgage so that will free up cash for you

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Thanks, Rose. A friend gave us similar advice over the weekend. There wouldn't be much of a rental market though, apart from the summer but we could get maybe about 6 weeks at around €600 a week in the summer.

Corkgal, thank you also. You make a lot sense in the cold light of day.

Complainer, we used it very little this year. About 2 weeks of the summer and around one weeknd per month apart from that, along with 5 or 6 days last Christmas.