Want to move to new home, sell rental properties or not?

unclefester

Registered User
Messages
5
Age: 47
Spouse’s/Partner's age: 42

Annual gross income from employment or profession: 55k
Annual gross income of spouse: 44k

Monthly take-home pay: 5.9k

Type of employment: Private PAYE

In general are you:
Saving

Rough estimate of value of home:
Value 330k
mortgage 290k (ECB+2.25%) 24 years left

Other borrowings – car loans/personal loans etc:
No loans
Expenses:
Schools, planning on private school for one child in 2021, between 5K-8k a year

Do you pay off your full credit card balance each month?
Yes

Savings and investments:
Cash Savings: 30k
Shares: 20k

Do you have a pension scheme?
Private (approx. 11% mixed employee/employer contribution)
spouse (approx 7%)
Previous employer 20k (inactive)

Do you own any investment or other property?
House 1:
Value 330k (Re -Mortgage 130k @ 4.4%; 20 years left. ). originally bought for 140k
Rental income (after letting agent fees): 11.5k/annually
House 2:
Value 180k no mortgage , bought for 130k
Rental income (after letting agent fees): 8.5k/annually

Ages of children:
6,13,16

Life insurance:
Death in service with pension
2 mortgaged properties covered for death.

What specific question do you have or what issues are of concern to you?
House 1 and 2 are in the UK. All values converted to euros.
We want to move house in ireland within 2 years but haven't a large enough cash deposit. New house purchase possibly 400-450k?
Should we sell both uk properties and have one small irish mortgage (for new property) or sell one uk property and have larger irish mortgage (for new property) but also keeping one property in the uk(one with mortgage or one without).?
I don't want to let the UK properties go too easily if I don't have to as would like to keep them for inheritance, but we want to move and need some deposit so what are the options available?

thanks.
 
When you say "rental income (after letting fees)" is that profit? Really it's your net, after-tax profit (ie your rental income less all expenses, less all taxes) that matters. That's what you actually keep.

On the face of it, you have €420k in equity tied up accross the three properties. You could be mortgage-free by 50 if you liquidated all three properties. That would be a nice place to find yourself.

Incidentally, I think you have room to increase your pension contributions...
 
Ok, so, in round numbers, you are making a profit of €20k per annum before tax on the rentals (ignoring price appreciation/depreciation). Let's call it €10k pa after-tax.

If you were to borrow €400k at, say, 3% pa to buy your new home, the interest cost would be €12k pa. That's obviously higher than the net, after-tax profit on the rentals.

No brainier for me - sell your three properties and buy your desired home mortgage-free.

And then start maximising your tax-relieved pension contributions!

You're actually in a great position financially. You just need to be careful not to fall into a "mental accounting" trap (eg this property is for Mary, this one is for Johnny, etc). Money is money at the end of the day.

Hope that helps.
 
If your profit on house 1 is €11.5k on an investment of €200k thats 5.75% profit, house 2 4.7%. Is that before tax or after tax.

If you sell the UK properties what is the Capital Gains Tax position.
 
That amount is before tax. Cgt in UK would be minimal. Not sure what it would be here
 
Last edited:
How about this an an alternative? Sell both UK properties then have about 380k to purchase house outright in Ireland but keep original irish property to let out. Rent should cover the mortgage.
What is best way to move money over from UK to here and should I leave it in UK bank account for more than 6 months to pass the Irish deposit rules?
 
No idea about deposit rules but yesterday for the first time I used TransferWise (TW) to move Euros to Sterling. Someone advised me of this in relation to a property transfer of funds. I opened an account with Transferwise very easily online a week ago. Then yesterday I wanted the recipient to receive 300 GBP. I put in all the details. Then the site informed me of how much it would cost me. Less than 2 pounds. The beauty was the exchange rate was fair. I compared it to the rate on the ECB website. Then it informed me where to transfer my Euro’s from. So I went into my online banking and made the transfer. Which was also to an account in the country I’m based in. TW said it would take until Monday for recipient to receive. Half an hour later I got an email from TW that they had my money. Followed a couple of minutes later to say they had transferred it to recipient. Recepent texted metro say the money in there in the Monzo account.

On TW I had the option of a faster transfer which would cost more. But based on what happened to me I’m amazed at a transfer from the continent done to the UK within about an hour.

When I was o the ECB website I had a look at the state of sterling. It’s really good for me so I’m paying upfront now for some bills as I’ll surely not do better than right now. It would be therefore a bad tone for you to sell. But I’ve no crystal ball and I’m only referring to exchange rates.

Check out the TW website. It’s all very transparent and you can input amounts to figure out how much 100k GBP is in Euros.

I tried various method recently. Amex cost me 55 Euro’s to pay 2000 GBP. Prior to this I checked out how much a direct bank transfer was, if i r3mber correctly the difference was 150 Euro which is why I used Amex. And I telephoned Amex to ask them how much.

I also used MasterCard in the UK. Taking out sterling using my normal bank card seemed the most expensive.
 
Last edited:
Are you a UK Citizen and were you born there? My understanding is that if your domicile is UK you only pay tax in Ireland on a remittance basis i.e. if you bring in the funds to the country. In the UK they still allow you to use the ~12k allowance before paying tax on the property but I believe if rental income / income is above 6k you have to declare it each year. If my understanding is correct you can have quite a tax efficient investment in the UK if you don't need to bring the money back into Ireland.

There is a very good calculator for estimating the tax due on disposing UK property as non resident, I checked on your first property and it came out about 8k, now I made some assumptions. It appears it doesn't take into consideration the mortgage. I am not sure then what tax you would have to pay in Ireland to bring the cash back, does this fall under the Tax Treaty?

If my understanding is correct you probably have a relative small UK tax liability on annual basis? If the goal is to buy a new house in a few years the best strategy might be to use the UK income to pay down UK mortgages then sell up and transfer lumpsum to Ireland and you should have more than enough for a cash deposit.
 
Back
Top