Sell Apt or continue to rent it out?

A

Aidan McGrath

Registered User
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9
Hi all,
I have an apt. which has a EBS SVR mortgage outstanding of E113k. Current value is E176k. Two years ago i decided to rent the apt (i have paid and declared all income/taxes but not informed EBS) as we wished to live in an another location for work/life purposes which we rent.
Originally paid E203K for the apt back ion 2002 plus stamp duty of E20K.
Rental income E1200 pcm producing annual surplus of E2000 after allowable exps but after tax residual annual loss of approx E1200.
Basically should I hold and hope for capital appreciation back to E203K or sell it now. Current tenant wants to buy it so no advertising/estate agent costs just solicitor at 0.6% of property value. Local estate agents feel property will not appreciate back to E203K but who can tell the future...!!
We want to buy again in 4/6 months time as it seems that a sale may be best IMHO.
Would appreciate thoughts
Thanks,
 
Your gross yield to current value is about 8%, which is excellent, but your financing costs are high if the mortgage is at an SVR rate. Have you tried to refinance to a lower rate?

Personally, I would want to see a spread of around 5% between the gross yield on a rental property and the interest rate at which the property is financed before I would consider it a "hold".
 
You've said you want to buy again in 6 months, do you have sufficient savings for the required deposit? If not, selling now and getting all of that sorted in advance of buying looks like it will leave you with a lump sum of approx. €60k after costs.
 
Another question - and i´m sure i know the answer but just to check..

Stamp duty paid in 2002 on a property value of E203K. Property now worth E173K. Any relief available on the stamp duty paid in 2002? Or on the capital loss?
 
OK - taking the information above.

As i rented out my property for two years from June 2013 to June 2015 (sale date) i will have to ´check´for CGT gain/loss on property. The fact is i have made a loss - bought for 203K plus stamp duty 20K 0 223K sold for 173K = 50K chargeable loss (not including indexation relief which makes the loss bigger). So i in fact have a chargeable loss asset which i can carry forward indefinitely of greater than 50K.

Now i cannot use the chargeable loss against Income tax payable but can use it against future inheritance tax liabilities?
Are there any other tax planning strategies that i am missing?

Thanks,
 
Damn - just realised the chargeable loss would be restricted by the period of PPR / Period of total ownership leaving just 1/12 of loss available for relief in future years ono 4.5K.
Anything that can be done with the remaining 45-50K loss?
Should lobby the MOF to retrospectively and for a short time make the full loss portable against other taxes?

any thoughts?
 
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