Excellent summary, thanks for that.Top post updated and somewhat simplified.
All comments welcome.
You're probably right.On reflection, this additional stuff is not relevant to the decision.
My reasoning for including that information was to demonstrate that this hypothetical couple have a genuine choice
Well, all modern apartments will have an OMC service charge.Properties with service charges make worse investments
Bear in mind that an agent's fees are deductible for tax purposes so in reality you would only be saving €1k. Is €1k sufficient compensation for the time and hassle involved with managing a rental property?I would not have a letting agent, that saves €2,100 p.a.
Updated May 2020
....
While no two circumstances will ever be identical, a typical scenario might look something like this:-
Market Value of Property - €300,000
Original Purchase Price - €250,000
Mortgage Outstanding – €100,000
Remaining Term – 10 years
Tracker Rate – ECB+1%
Projected Rent – €1,750 per month
Value of Target House - €400,000
Projected Initial Mortgage Rate on New PPR - 3%
Cost of Moving (stamp duty, legal, additional furniture, etc.)
less the value of any "cash back offer" - €10,000
Option 1 – Keep Apartment as Rental
Gross rental income............................................................................ 21,000
....
LPT.........................................................................................................................315
Net Rental Income After Tax...............................................................6,405
Option 2 – Cash out Home Equity
Interest saved by liquidating equity
in apartment and applying to
house purchase (€200k @ 3%)................................................................ 6,000
Mortgage protection premiums on additional
borrowings (€200k)............................................................................................450
Net Total Saving..................,....................................................................... 6,450
Why would you assume this? Rents are historically kind of volatile in Ireland.and rent increasing
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