Should I sell?

I am moving in with my partner who is mortgage free. I'm just wondering if I should cash in my property in Monkstown which is probably worth about 600k and my outstanding mortgage is 310k. Our 5 year plan is to probably build a new house - so I'm not thinking long term on my house investment. Do you think I should cash in my equity and lodge it into an interest making account for the next 5 years or should I sit on my investment, rent out and hope that property values rise?

I've done out spreadsheets and at current interest rates, I could potentially make after DIRT about 37k over 4 years on my equity if lodged into an account.

In terms of holding onto the property,I will get rental income of about 15k per annum (assuming rents dont fall even more) and an annual tax bill of about 5k on the property. Also, if property taxes are installed next year, I will also have to consider this expense.

My actual mortgage payments per year are currently at around 16.5k (but rates are very low at present)

If anyone can offer any sensible advice, it would be much appreciated!! Thank everyone

It really all depends how stable your relationship is, if your estimates are correct you arent affected by negative equity,so your in a good position. If I was you id rent it out and see how your relationship goes.

Hi Kopkidda

We are getting married next year! So I think its pretty stable.

I know I'm not affected my negative equity, but if I wait for 4 years to sell my property I may have further eaten into my equity (if property prices keep falling)

My problem is to try and work this investment the best way forward for the future at the greatest gain and less cost!

I'm afraid any answer you get here will be opinion on the future direction of house prices, which nobody knows for sure.

If you are planning to build in the future you might consider buying the site from the equity you release upon the sale of your current house. This way you won't get caught on timing e.g. if prices were higher at the time you bought the site versus when you sold your house

My belief is that taxation policy comes into the equation as regards whether it's worth holding onto your house. The last budget reduced the amount of interest allowed to be offset against rental income for taxation purposes.

If interest is completely excluded you could end up paying up to half your rent as tax. In that situation you'd have to be taking in something like €60k p.a. in rent to justifty a €600k property investment. As it is you are only making €10k p.a. and for me this is not an adequate return on €600k for the hassle and risks involved

Thanks Kaiser

I think you are right. I was already thinking along these lines.