Another rent or sell house thread

L

LJS1978

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Hi all,

A slight variation on the previous queries. I’m moving to the US on assignment for 3-5 years ( ex pat style deal with accommodation paid for). I’m trying to decide what to do with our house. Some detail

Value - approx 285k
Mortgage - 270k on tracker ECB +0.95%
Rental likely to be 1500pm
Management Fees of approx 1600

We are unlikely to move back to the current house post the US trip but consider8ng renting it out while we are away. We would likely sell on return when we buy new place but migh5 depend on tenant etc.

I’m just not sure it’s worth the hassle - any thoughts?
 
Which bank is it with?

If, for example, it is with BOI, keeping it in place might enable you to get a cheaper mortgage on your return.

Nonetheless, it’s a profitable investment.

And you have a CGT shelter on the basis that it was your home.
 
The interest will be about €3k a year.
The rent will be €18,000

Let me know if you can find a better return on €15k

If it retains its CGT status while you are assigned abroad, that's another big reason for keeping it.

And when you return, you will probably be able to move it to another family home. Although this is only a small factor. After 5 years, the value will be much less as you will have paid off a lot of capital. But it's good to have that option.

It is also a hedge against house price moves in Ireland.

Brendan
 
LJS1978 said:
I’m just not sure it’s worth the hassle
Click to expand...
Equity of 15k, with potential profit before tax of 12,000 a year, allowing for an agent to let it and collect rent. Low tax rate if non resident and you leave the money here.

What's your benchmark for deciding if it's worth it, and what's your risk appetite? Do you have free cashflow to pay mortgage if there are vacant periods?

Make sure you understand the capital gains tax rules and exemptions for living abroad for work - you must move back into the house before you sell to benefit from the exemption.
 
Some of this advice already given, but worth repeating:
  • You will pay very little tax on this given that your main wage will be outside Ireland. Unless you have lots of investment income already in Ireland.
  • It gives you a hedge against Irish prices and/or a base to move into when you move back home. Buying a property from abroad is difficult.
  • You will absolutely need an agent to deal with the tenants. You will not be able to field calls about broken toilets from the US. Factor this into your costs. It's tax deductible but remember you won't be paying much tax
  • Look very, very carefully at CGT issue. To me this looks like a peak-time purchase on your part so you might not be looking at much, if any, gain yet.
  • You will pay Class S PRSI I think on the rental income if it is over a certain threshold. This is a pain, but also keeps your contributions up for the state pension in Ireland.

The big downside risk is some combination of interest rates rising, rents falling and house prices dipping. All of this could turn it cash-flow negative. This could leave you in a situation of having to subsidise the mortgage while unable to sell.
 
Redonion- You mention low tax if non resident. I'm london based now and non resident. I pay tax here on my rental income- 20% - but I declare it to HMRC and they tax me on it at 40%( they take tax paid into allowance of course)
A mate in similar circumstances tells me I shouldnt have to declare it if I dont bring the money into the UK. Is he telling me porkies?
NBC
 
Thanks Red onion- What does claim remittance mean?
I checked that link. If the income is > 2000 pounds one can' claim the remittance ' but you have to pay £30000 if you've been in the uk for 7 of the previous 9 tax years...
 
Remittance basis generally means if you are foreign domiciled, you only pay tax on the foreign income that you bring into the country.
I'm not familiar with the UK tax system, so I wasn't aware of that additional charge from the 7th year! That's a big annual charge.
Unless you've huge foreign income, it's not of benefit.
 
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