TheLastBeep
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5. indefinite tenanciesArguments for selling:
- We'd likely be able to sell at a reasonable profit giving us the potential to buy in the UK with a relatively small mortgage
- Selling would provide us with a clean break and eliminate any potential stress or headaches associated with being a landlord
- Neither of us have family in Dublin so we'd be remote landlords and would potentially need an agent or similar arrangement
- Possible (likely) we'd have to switch to a BTL mortgage on a much higher rate. Application process could also be complicated by work location
1a "might" being the operative word, you could just as easily have problem tenants who don't pay the rentArguments for renting:
- With rental prices like they are at the moment we might be able to achieve a rent far in excess of our mortgage
- Maintain a foothold in the Dublin property market meaning we're not priced out if we do decide to move back
- Attachment to the property having invested in it over the last 7 years
I would suggest the poster think very carefully about their decision.I can see the dilemma your in with such dysfunction in the market, however, if you have any interest in returning to Dublin, you’d need your head examined to sell your home.
As for the buy to let mortgage, I wouldn’t change a thing, you continue to pay your mortgage as you are now. You pay the tax due on the rent, and that’s it.
When/if you do ever decide to sell, the rental years may need to be considered for Capital Gains.
Kimmage particularly, is a great area, should you sell, there’s a very strong chance you’re going to be priced out of what you have there at the moment.
A home is an attachment, it’s alway easy for someone else with no connections of same to be dismissive about such things.
In your case, I would have an agent manage the rental, they will do the best checks as they can, that’s where they get their revenue from.
I’ve never had a bad tenant in Dublin, it’s the RTB and Misinformed Politicians I fear more.
This is true but that's not an argument for selling immediately. You can always remove a tenant at a future point if you need to sell. But see point on CGT below.Arguments for selling:
- We'd likely be able to sell at a reasonable profit giving us the potential to buy in the UK with a relatively small mortgage
I think the clean break part is not so much a big deal. You can get a managing agent for as little as 7% plus VAT who will inspect, deal with tenants' queries and source tradesmen for repairs. With email and phone you can supervise this pretty easily. You will presumably be back in Dublin from time to time and can inspect yourself. But it's important that a tenant knows that you are not totally passive. It's a landlord's market so you can be extremely picky. Find people in their twenties with a good career trajectory and an income likely to grow. I agree with @LS400 that if you are careful and are at the higher end of the rental market then there is much less risk of a bad tenant.
- Selling would provide us with a clean break and eliminate any potential stress or headaches associated with being a landlord
Once you pay the mortgage on time your lender will neither know nor care that it is no longer a PPR. There are probably tens of thousands of mortgages like this. You would be mad to be tell the bank about this, just change the correspondence address to a family member in Ireland. You would be mad to approach the lender about this. Particularly as a fixed 1.95% is the lowest rate ever seen and likely to be ever seen in the Irish market!
- Neither of us have family in Dublin so we'd be remote landlords and would potentially need an agent or similar arrangement
- Possible (likely) we'd have to switch to a BTL mortgage on a much higher rate. Application process could also be complicated by work location
Don't forget about tax. I simplify a bit, but for non-resident landlords it's 20% of rental profits. There may be a UK tax liability as well so look that up in advance.Arguments for renting:
- With rental prices like they are at the moment we might be able to achieve a rent far in excess of our mortgage
This is the most important part! You remain hedged against the Dublin property market so will never be priced out. If you do decide to come back you won't have to rent before buying again.
- Maintain a foothold in the Dublin property market meaning we're not priced out if we do decide to move back
I think this is less important. But if you like the area and have good neighbours then that's useful information and you wouldn't know that if you tried to move somewhere else when you come back.
- Attachment to the property having invested in it over the last 7 years
Hedged against the Dublin property market is extremely important.. Imagine trying to find your current property in today's market!This is true but that's not an argument for selling immediately. You can always remove a tenant at a future point if you need to sell. But see point on CGT below.
I think the clean break part is not so much a big deal. You can get a managing agent for as little as 7% plus VAT who will inspect, deal with tenants' queries and source tradesmen for repairs. With email and phone you can supervise this pretty easily. You will presumably be back in Dublin from time to time and can inspect yourself. But it's important that a tenant knows that you are not totally passive. It's a landlord's market so you can be extremely picky. Find people in their twenties with a good career trajectory and an income likely to grow. I agree with @LS400 that if you are careful and are at the higher end of the rental market then there is much less risk of a bad tenant.
Once you pay the mortgage on time your lender will neither know nor care that it is no longer a PPR. There are probably tens of thousands of mortgages like this. You would be mad to be tell the bank about this, just change the correspondence address to a family member in Ireland. You would be mad to approach the lender about this. Particularly as a fixed 1.95% is the lowest rate ever seen and likely to be ever seen in the Irish market!
Don't forget about tax. I simplify a bit, but for non-resident landlords it's 20% of rental profits. There may be a UK tax liability as well so look that up in advance.
This is the most important part! You remain hedged against the Dublin property market so will never be priced out. If you do decide to come back you won't have to rent before buying again.
I think this is less important. But if you like the area and have good neighbours then that's useful information and you wouldn't know that if you tried to move somewhere else when you come back.
Don't forget CGT. If you move away and sell you are liable for CGT on the capital gain for the proportion of the period that the property was let. So if you sell after two years you would be CGT @33% on 2/9 of the gain - that's a lot! But at the same time if you move back to the house and occupy it again as a PPR for a year then it will qualify for a full CGT exemption again.
Good luck with the move and do let us know what you decide!
Don't forget CGT. If you move away and sell you are liable for CGT on the capital gain for the proportion of the period that the property was let. So if you sell after two years you would be CGT @33% on 2/9 of the gain - that's a lot! But at the same time if you move back to the house and occupy it again as a PPR for a year then it will qualify for a full CGT exemption again.
Good luck with the move and do let us know what you decide!
Note
The last 12 months of ownership of a PPR is considered to be included in your period of occupation.
This allows for the possibility that you have moved into your new home, but have not sold your previous home.
Indeed. But wouldn’t that be the scenario here for the OP?There are exceptions where the property is deemed to be occupied where your employer requires you to work at a different location for up to 4 years, or indefinitely if abroad but in that case the property must be occupied by you before and after the time you are away.
While I would trust an agent to manage repairs, ensure rent is received etc I would absolutely never let them choose a tenant. Between your professional and personal networks you might already know someone suitable that you can do discreet background checks. Note the CGT exemptions if you work abroad as well, you might be exempt but seek correct advice on this.
You can’t make use of the RaR scheme if you’re not living there yourself consistently. By the sounds of the OP’s plans - no family in Dublin and a UK job - they won’t be back frequently enough to qualify.If you have a lodger with the rent a room scheme you can let for max €14k pa which is tax free but must be included in your annual tax return.
Er, the OP said his job is flexible enough to work remotely from the UK. That sounds like it's based in Ireland with Irish PAYE, PRSI, USC, etc etc. Couple that with a house, mortgage, utilities, mobile phone, etc, etc, in his name in Ireland and it looks very much like he does indeed reside here.You can’t make use of the RaR scheme if you’re not living there yourself consistently. By the sounds of the OP’s plans - no family in Dublin and a UK job - they won’t be back frequently enough to qualify.
It’s not about how it “looks” for tax law, it’s how it is.Couple that with a house, mortgage, utilities, mobile phone, etc, etc, in his name in Ireland and it looks very much like he does indeed reside here.
In fact it’s very much the opposite. Tradesmen take calls from agents as they know there is repeat business. People ringing them up randomly are much more likely yo be messers.They don't choose the most cost effective tradespeople etc.
By the sounds of the OP’s plans - no family in Dublin and a UK job - they won’t be back frequently enough to qualify.
We will agree to disagree so. I have a good network of trusted tradesmen who I know are genuine and reasonable with prices. I have used them for the last 15 plus years.In fact it’s very much the opposite. Tradesmen take calls from agents as they know there is repeat business. People ringing them up randomly are much more likely yo be messers.
In the OP’s shoes I would recommend strongly in favour of using an agent.
The bolded part is incorrect - the period when you were not resident in the property is subject to CGT as a proportion of the total period of ownership, but the final 12 months is considered to be a period of occupation:
Revenue:
You are spot on with your CGT explanation.
Agent's differ. Friend of mine worked in a letting agency and he recommended an excellent plumber to me that they used all the time. I used the guy to do jobs both in my own PPR and in a BTL. A good agent will know who's reliable and reasonable. A bad agent won't care. Ask around for recommendations for agents.We will agree to disagree so. I have a good network of trusted tradesmen who I know are genuine and reasonable with prices. I have used them for the last 15 plus years.
Do you honestly think an agent is going to find the best tradesmen? It's a job to the agent using the landlords funds.
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