Maybe it is best if I re-phrase the original question posed in order to reach a clearer conclusion. As already explained, the plan is to buy property that I may retire to in approximately seven years’ time and can cover the purchase price with savings. I intend to rent it out in the meantime and am aware of the importance of location, yield and the responsibilities of being a landlord.
Many thanks for the helpful feedback given by previous posters and I realise that a decision to buy now will vary for each individual depending on life circumstances but for me (not having got caught up in boom time mania and who saved during this time) the property is in the right location, has real rental income potential.
Making the following assumptions – home owner with mortgage already paid off, in full-time permanent employment, DB pension and AVC contributions over 20 years and no dependents.
The question is - buy with cash now or borrow i.e. does it make more financial sense to take out an BTL mortgage for rental income tax-saving purposes i.e. 75% of 5.5% interest write-off on the rental income.
As already mentioned we can only plan based on information currently available to hand and I would prefer not to get into idle speculation. If government policies do change then I'm in a lucky position to have savings to cover the mortgage in full (i.e. if interest relief is reduced/or eliminated). At the minute, 75% of interest write-off of a BTL mortgage looks attractive in offsetting at least 52% tax (41% income tax, 4% PRSI, 7% USC etc). I’m also assuming that life assurance associated with the mortgage is also an allowable expense. The alternative is to purchase with savings - and pay full tax liability on any rental income.
Constructive feedback welcome!
Thanks.