BiddyMaggie
Registered User
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- 11
Note that 2.15% return is taxfree and zero risk. I’m a big fan of equities, but I’d take that 2.15% taxfree return first.Overpaying the mortgage is fine, but that's only yielding 2.15% pa. Put it into equities instead
Thanks for your reply very informative. The tax relief on the rental property is minor on €115k mortgage. Forgot to say the Zurich savings scheme are in the kids names and are declared as €6k each per year as gift exemption. Was thinking I could lump €100k off rental at 4.5% but don’t know if it’s a bigger saving than off PPD. €100k invested would be liable to cgt so realistically you are investing in your mortgage at a rate return of approximately 5% guaranteed. Was close to investing in EIIS scheme but lumping into avc to write off tax bill on rental seemed much more straightforward. Am concerned that will have to be paying 40% tax rate when drawing down pensions. Is there a way of minimizing this. We are jointly assessed. Should we go individually assessed nearer retirement. Retiring at different ages make a difference to tax paid on pension? Think property is overpriced at moment willing to sit and wait a couple of years. If we pay off mortgage rent will replenish the fund in 6/7 yearsDon't pay off the rental property mortgage - you're getting tax relief on that! (Deduction from rental profit.)
Don't leave €200k in cash deposits - that's costing you €20k pa in loss of purchasing power doe to inflation.
Absolutely maximise allowable pension contributions for both of you - that's a no-brainer.
You should be maximising your investments and building up wealth. Historically, equity investment has been the best way to go. You're looking at a fifteen year plus span so you can take the ups and downs that go with equities if you buy and hold for the long term. You can invest directly or via a low cost ETF that tracks, say, the S&P500. (That's Warren Buffett's advice for the amateur investor, by the way!) I'd avoid funds such as Zurich / Irish Life due to the high costs which really eat into your returns. Overpaying the mortgage is fine, but that's only yielding 2.15% pa. Put it into equities instead
Rental property is fine too, despite noises to the contrary. Yields of 8% plus the chance of capital appreciation are easy enough to come by. Choose wisely and you could get a property which could accommodate college going kids as well as giving them an income through rent-a-room.
Also, with your high incomes and accumulated investments, and the sky high rates of personal tax you're inevitably paying, you can look at making a relatively modest EIIS investment each year. There are some absolute clunkers out there so, perhaps better to stick to a pooled EIIS fund from the likes of Goodbody and BDO. With 40% tax relief, all you need is for it to hold its own and you're doing fine.
Personally, I wouldn't buy gold. It's a possible hedge of value in bad times, but has historically underperformed equities by a considerable margin. Like I say, you can afford to ride out dips in the market.
Finally, you should think of estate planning as you look set to leave your children substantially in excess if the CGT threshold. Might be worth paying for some advice especially around the possibility of CGT tax free transfer of their PPRs.
A break fee will be calculated, but it will be zero. If you try to shorten the term after paying the lump sum, they will say that requires giving up your rate at refixing at new rates, so so keep term the same and keep overpaying.Waiting on AIB to respond if paying €100k off 5 yr fixed is allowed without breakage clause.
Why? I can't think of a single scenario where there's a benefit to single assessment.Should we go individually assessed nearer retirement.
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