To sell or not to sell? Clifden

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bobsoap05

Registered User
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Hi, Three years ago I bought house in Clifden, Co. Galway for €220,000. I am quitely confident that it could sell for €320,000.( lets presume it will for argument sake) We let through a letting agency and we has recieved about 23 weeks so far for the year. It is just paying for interest only loan. Should we sell? After tax we should walk away with about 70k. Very tempting as my gut tells me that the market is on the up for now, but it will begin to slow in late 2007. I think I should take profit now whilst leaving room for more profit for the next potential owner.

Any opinions would be appreciated.
 
Your guess is probably as good as that of anyone else on AAM.

If you are happy with €70k, and not prepared to sit out any slump, then it would seem like a good idea to sell now.

One question you may want to consider-what plans do you have for any gain you realise?
 
has many have said on AAM before , no-ones ever lost money taking a profit

like the poster above if your happy with 70k and have a gut feeling the market could tank then sell
 
70K now maybe better than risking 100k next year or zero K next year.

Bird in the bush........
 
You could also think about holding on to the property refiancing and extract 70K you still have the property you still have an increased equity stake and you have avoided having to give the tax man a 20% share of your profit.

THis of course does have a risk to it but if the property was to fall only slightly all you may have lost is the tax you would have paid if you sold now.

I think it worth a taught.
 
ARCH said:
...if the property was to fall only slightly all you may have lost is the tax you would have paid if you sold now.
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I don't understand this. Can you please explain?
 
Thanks Arch, That is interesting. Is it possible to remortgage the property based on its present value, and pocket the balance. In other words if I,

Value property at €320000.
Get mortage of €320000.
Pay off interest only loan of €220,000.
Pocket the balance without paying CGT.
Restructure a new mortgage.
Money in pocket plus still own property.

Is this possible?
Is this legal?
 
Is this possible?
Is this legal?
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Of course it isn't. Why would anyone pay CGT at all if you could do this? CGT is due on the difference between the purchase price (plus capital expenditure) and the sale price. It has nothing to do with balance left on the mortgage. What ARCH suggested is rubbish.

If you did this you and didn't declare and pay the CGT, you'd have evaded tax, plain and simple.
 
ARCH said:
You could also think about holding on to the property refiancing and extract 70K you still have the property you still have an increased equity stake and you have avoided having to give the tax man a 20% share of your profit.

THis of course does have a risk to it but if the property was to fall only slightly all you may have lost is the tax you would have paid if you sold now.

I think it worth a taught.
Click to expand...

Surely you have to pay for the re-financing! Banks don't give it away for nothing you know. Plus there'd be solicitors fees. Capital gains tax would still be due when house is eventually sold. Just putting off the inevitable IMO.
 
Darag- How would you pay capital gain tax if you have not sold. Only remortgaged.

CAPITAL GAIN TAX IS PAYABLE ONLY WHEN YOU SELL.

Ofcourse you can remortgage, it is doubtful though you would get a full 100% but should get around 90% of value. Yes there are some expense solictor fees etc but these are much less than the CGT.

Yes CGT will be payable in the future "IF YOU SELL"

But if you continue to refinance every few years and extract the increased value then why sell. If you never sell and pass the house to you kids then provided the value is within CAT limits. You never pay the CGT.
 
What Arch is suggesting is legal, however bobsoap05 is asking whether he should stay in, or get out. Arch is suggesting he gets him/herself in even deeper.At a min, you'll have higher monthly payments (interest only at the moment?), plus the costs involved as described above.The CGT part is postponed.
 
Sorry, I take back the rubbish comment, ARCH. I read the suggestion as a means of taking out the profits avoiding CGT in the context of an eventual sale. Still seems like very dodgy advice 'though - all you're doing is borrowing a further 70k.
 
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