Buy or Rent?

[Calico]

deleted post

 

[murphaph]

I'm looking for a few perspectives on whether I should buy or rent given my particular circumstances. I inherited an apartment a few years ago and as I owned no other property at the time was able to avail of ppr relief - the condition being i live in the property for 6 years as my ppr

I'm confused and I hope I'm not the only one. You inherited it so what relief are you claiming? Was it not mortgage free or something?

 

[Calico]

Deleted post.

 

[murphaph]

In certain circumstances you can inherit a property and not pay inheritence tax on it if it is your only ppr (principle private residence). For example if a parent dies his/her child can inherit the home tax free provided they don't already own property. In my case, the property that i inherited has to remain my ppr for 6 years. During this time if I buy another property, I have to pay stamp duty as I am not considered a first time buyer (even though I have never bought a property before). The transaction would be considered a property investment transaction. However, after having the inherited property as my ppr for 6 years, I regain ftb status for stamp duty and mortgage interest relief.

Wow, didn't know any of that. Thanks.

 

[Afuera]

Calico, I still think you are a FTB, as you have never bought. When you say that you can regain your FTB status it sounds a bit misleading since I think the only circumstances that allow a person to be a FTB again are in the case of a divorce.

The way I see it is, if you buy somewhere else as your PPR, before the 6 year period specified, then you would have to pay the inheritence tax. Either that, or you could purchase a 2nd home, but it could not be your PPR (i.e. you could not live in it) so it would have to be classified as an investment property, thereby incurring stamp-duty. In any case, when you purchase you would lose your FTB status.

Regarding weighing up the buying vs renting, if it is only a temporay move to Dublin, then I suggest to rent. The interest you would pay on the mortgage for a property in Dublin over a 3 year period will almost certainly exceed the cost of rent during that same period. The fact that you would lose your FTB status for a temporary move is also a major negative towards the case for buying.

Also, be careful here because from my understanding of it if you move out of the property you inherited, then you would be liable for all of the inheritance tax. Get professional advice if in doubt.

 

[Calico]

Deleted post.

 

[Afuera]

Obviously, I'm not going to change pprs (even though i plan on working in dublin) because the inheritence tax would still be alot, but the option to buy a house is still on the table if i paid stamp duty etc. Although I would live in it for work purposes, it wouldn't be my ppr.

Ok, that makes sense; I see what you are trying to do now. If you are moving for work purposes and provided you do not rent out the inherited property, I think you should be ok.

Not sure why you are still considering buying in Dublin though (at least now anyway)?

If you wait 3 years, you would be able to buy as a FTB. If you buy now you will have to pay stamp duty and lose your FTB status. Over three years, the interest alone on the mortgage in Dublin will most likely cost more than renting. For your circumstances, the argument to buy right now does not stack up IMHO.

 

[Calico]

Deleted post.

 

[Afuera]

Oh, it's just that rents are so high. I'll be paying at least €1200-€1300 per month which is an awful lot of money. Sure I can wait for 3 years if I want but in the meantime I'm paying someone else's mortgage......

I find this to be a strange way of looking at it to be honest. Regardless of whether you buy or rent you are going to be paying someone else for the privilege.

A mortgage of €310,000 will end up costing you around €1300 per month in interest alone. In that case you would be paying the same monthly figure directly to the bank, rather than to the landlord. Either way, it is not going towards improving your overall finances.

If you work out the full cost of buying (including stamp duty, opportunity cost of losing FTB status, fixtures, fittings, etc.) over the next three years, versus the cost of renting for the same, I imagine that renting would work out remarkably cheaper.