Buy now for move later

[gribr]

Myself and my girlfriend currently live and work in Dublin in our house that my girlfriend owns but are planning to move down to Galway in about 2 years time. We are hoping to build our own place but after being down a couple of times we are finding it difficult to find the time to even find a site let alone manage a build from Dublin.

As a result what we are thinking of doing now is buying a place relatively close to the city on the north or east side that we can rent out until one or both or us are ready to look for a job in the area and move down and then look for a site. At least this way we would have a base in the area and it should be easier to manage. Also we'd already have an investment that we could hopefully sell for a profit when our own build would be ready.
However, our current projections are that given the prices and the overheads necessary, we would have to put between €400 and €600 extra per month ourselves on top of the rent received to cover the mortgage.

So a few questions:
I'd be buying this house on my own as a first time buyer so how would that effect renting it?
Also how does the tax work on a rented house when the rental income is less that the mortgage cost?
Is this a good or bad idea?

 

[Sarah W]

As a first time buyer buying an investment property you will lose your Stamp Duty exemption and will pay investor Stamp Duty and mortgage rates which can be higher than homeloan rates (depending on the lender). You will be limited to a 85% advance - possibly 90% - subject to criteria.

You can offset the mortgage interest and other expenses involved in running the property against the rental income to reduce your tax liability.

Good idea vs bad? IMHO bad but it's up to you.

Sarah

www.rea.ie