Bought as PPR but not moving in due to changed circumstances

MoTown

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A bit of background first:
We (wife & son) have been living in a 'granny flat' in my family home in the country for the past year.
My wife works in the local hospital. She is pregnant and will be going on maternity leave shortly.
I work in Dublin and have been renting Monday to Thursday.

We recently bought a house in Dublin and we were planning to move in when she goes on maternity leave. She was going to take a career break post maternity leave and then look for a job in Dublin.

However her mother has just been diagnosed with a severe medical condition and my wife wants to be closer to her.

We have the option of building on her family land and I can keep commuting as before. We would like to keep the Dublin house if the finances can be made to work. We have sufficient savings left to meet 20% of the rough estimate of the cost of the new build.

So a couple of questions:
1. Will Revenue regard the Dublin house as a non-PPR now?

2. If it is now declared a non-PPR would it qualify for the Capital Gains Exemption if we keep it for 7 years?

3. The interest rate from the bank was for a home occupier, will they increase it to the investment property rate?

4. If we rent the house (from looking at daft the local rental rate should just about cover the mortgage. Worst case we'd be down €150 a month) will a bank have a problem with us looking for a second mortgage so soon after the first?
 
1. Will Revenue regard the Dublin house as a non-PPR now?

Yes.

2. If it is now declared a non-PPR would it qualify for the Capital Gains Exemption if we keep it for 7 years?

Not sure, but I think so. I can't see why it wouldn't. You have effectively bought an investment property.

3. The interest rate from the bank was for a home occupier, will they increase it to the investment property rate?

Probably. Check out the mortgage contract.

4. If we rent the house (from looking at daft the local rental rate should just about cover the mortgage. Worst case we'd be down €150 a month) will a bank have a problem with us looking for a second mortgage so soon after the first?

If you have an existing mortgage, it will make it far more difficult to get a second mortgage.


You should ask yourselves why you want to keep the house in Dublin? It will limit your ability to get a mortgage to build your home. You will be taking a significant financial risk if you do buy two houses. You sound very busy already - do you really want the hassle of running a business?

House prices have risen in Dublin recently, so it's very likely you will get back the money you paid for the house.
 
Hi Brendan,
thanks for your reply.
I know that we will be busy over the next while. I'm just trying to look after the financial aspect of the situation.

If you have an existing mortgage, it will make it far more difficult to get a second mortgage.

Would this be the case even if we have the Dublin property rented at a rate that covers the mortgage?
In repayment terms we would be able to finance both mortgages even if the Dublin property lay empty. It would mean some belt tightening but we could stretch to it if the worst came to the worst. However with the demand for accommodation I'd be confident we can get very close to the mortgage payment.
 
Having a mortgage already reduces the amount you can borrow.

If you have a huge income, enough to pay for two mortgages, then you will get a mortgage.

The only way to find out is to apply.

Brendan
 
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