Property investment pre 311214 CGT deadline

With the the proposed new LTV limit of 80% etc, and a much needed increase in units to hit the market about 2 years from now......what are the chances of much of a 'profit' for any investors, especially those who have bought in the major cities in the past few months (with the large price increase we have seen).

Worth considering
 
Budget 2015

Didn't hear any mention of CGT exemption being extended in today's budget. Definitely ending on 31/12/14?
 
As a result of yesterday's announcement I think they will be a rush to snap up a bargain before the end of the year.
 
moneybox said:
As a result of yesterday's announcement I think they will be a rush to snap up a bargain before the end of the year.
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That + the potential 20% deposit requirement coming in on Jan 1.

But from the CGT perspective, if you haven't got your house picked out by now, it'll be be a tight squeeze to get all done before 31/12
 
yeah it will be a tight squeeze if someone buys now or in the next couple of weeks especially if there is a delay in the legal searches. I still feel that lots of people missed the boat on this one as there didn't seem to be huge awareness aroudn it.
 
Hi Moneybox - that's why I started this thread on 10th September looking for opinions to my suggestion.
Have to say I am surprised by so few direct responses to the opening thread at the time.
 
I purchased an investment property last summer at a very low price and I wasnt even made aware of the CGT exemption, I only read about it on here. I intend to renovate this property and even if prices do dip in the future I can't see myself losing out as I intend to do most of the work myself. I will definitely be holding on to it now for 7 years. Considering that bank interest rates are at such a dsmal level, I think its a great incentive for people and a saving of 33% on CGT is something not to be scoffed at. It is also great for people who may just want to rent out a house for 7 years and then sell it on. Of course one should very carefully consider the location of the intended house purchase so as to maximise the benefits of making a profit in the future.
 
moneybox said:
A saving of 33% on CGT is definitely a no brainer and makes the investment very worthwhile.
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I remember when the expression no brainer was the mantra about everything imaginable.

You are assuming there will be a gain and that is a big assumption as there may not be in real terms when you factor in all costs of your investment choice, costs of ownership, taxes, vacancy periods, problems, repairs etc and the usual hassles. Investment property will not be as attractive as it has been this past 12/18 months for the following reasons.

*The zero % seven year CGT incentive dies 31.12.14, this has been a massive driver in times of low deposit interest rates and has brought people into residential property as an asset class when they may otherwise have stayed out, I've been to auctions and viewings and they stand out from the crowd, these are chasing yield and the elusive appreciation.

* Cash investors are either already in this market or are now a small percentage of it.

* Yields are compressed especially in desirable areas where there has already been a massive uplift this past 12 months in prices being achieved, take a look at the property price register in these so called desirable areas, commuter belts, Cities etc

* Challenges in getting a mortgage from January 2015 with new CB rules in place.

My view is that there will be a glut of property for sale from year 5 onwards as those who became reluctant landlords and reluctant 2nd home owners try to get out and avail of the exemption IF they can.

For me property in Ireland right now is absolutely the wrong investment choice, in my view buy now and you will get burned, wait until Autumn next year for the market to settle and as I see it you might well grab yourself a bargain but I won't be looking to get into this market.
 
moneybox said:
yeah it will be a tight squeeze if someone buys now or in the next couple of weeks especially if there is a delay in the legal searches. I still feel that lots of people missed the boat on this one as there didn't seem to be huge awareness aroudn it.
Click to expand...

Hi Moneybox,
I am considering buying an investment property in Cork. I have just returned to Ireland from abroad but am currently living in Dublin. The reason I am looking to buy in Cork is twofold

1) I am originally from Cork so have a far better knowledge of the area than anywhere else in Ireland
2) It seems alot of the properties in Dublin are simply out of my budget

I am seeing a large variation in the gross rental yields achieveable (albeit I have only done my research on daft with limited data)

It seems in areas such as Maryborough, Rochestown and bishopstown gross yields are quite low (4-6.5%) but closer to the city centre there appears to be more value. How do you find the rental market in Cork? Is your property located near the city centre and is there good demand for rentals (hard for me to tell not having lived there in 6 years).

What do you reckon is a good Gross Yield for city centre properties?

Thanks
 
It's worth noting that the 7 year exemption is a qualified one, and full exemption is only possible if the property is sold on the 7th anniversary of its acquisition.

Aidan Byrne, Taxation Partner, Baker Tilly Ryan Glennon commented "As we know, the property market has been on a steady upturn in the last year, people are seeing the value of this relief more and in practice are utilizing the relief. Those who have not bought property since the 7 December 2011, but have the means to do so, should consider availing of this relief especially in conjunction with succession planning and potential dwelling house relief".

By way of example of how the relief applies: if the property was bought in January 2012 and sold in January 2022, the property would have been held for 10 years, so 7/10 of any gain will be relieved from CGT and 3/10 is taxable.

I agree with Palerider above - "My view is that there will be a glut of property for sale from year 5 onwards (2011 + 7years relief = from 2018 to 2021) as those who became reluctant landlords and reluctant 2nd home owners try to get out and avail of the exemption IF they can."
 
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