Landlords should swap properties?

[Brendan Burgess]

So Johnny has an apartment with a market rent of €2,000 a month let out at €1,000 a month worth about €400,000.

Mary has an apartment (maybe even in the same building) with a market rent of €2,000 let out at €1,000 worth about €400,000.

Johnny terminates the tenancy as he wishes to sell.
Mary terminates the tenancy as she wishes to sell.

Johnny buys from Mary and relets it after 1 March for €2,000 a month.
Mary buys from Johnny and relets it after 1 March for €2,000 a month.

They will pay €4,000 each in stamp duty and maybe another €4,000 each in legal costs.

The market rules.

Any downsides to this strategy?

 

[Annieindublin]

Can they each only sell to another landlord? And this new owner can reset to market rates?

 

[T McGibney]

Any downsides to this strategy?

Crystallisation of CGT, Stamp Duty and conveyancing

Sounds crazy TBH.

 

[Brendan Burgess]

Can they each only sell to another landlord?

They can sell to anyone. But if Johnny and Mary are both landlords with similar properties in Mountain View Apartments, they could swap them without any real hassle and no need to pay agency fees.

 

[Brendan Burgess]

Crystallisation of CGT

OK, I had forgotten that.

If the CGT hit were low, it might be still worth doing.

Crystallising is really just paying it in advance...

 

[Dr Strangelove]

Crystallisation of CGT

Has to be paid eventually.

Stamp Duty and conveyancing

Recoverable pretty soon after resetting higher rents.

If the landlords can re-leverage they can get relief on the mortgage interest too.

 

[T McGibney]

Has to be paid eventually.

Are you certain of that? I'm not.

 

[Brendan Burgess]

Has to be paid eventually.

Unless the person dies.

 

[misemoi]

CGT will disappear on death won't it, so it all depends on the long term plans for the investment property. So if the intention was eg to sell to fund retirement, then CGT was expected to be paid. If it was intended to be passed down as part of an inheritance, then it might have been ignored. Though the recipient might end up paying CAT on their inheritance.

 

[T McGibney]

Unless the person dies.

Or the rate falls. Or they relax the rules, for example the long-overdue reintroduction of indexation relief.

 

[Greenbook]

I think that is doable.

CGT will be a cost, but they might be each entitled to the relief for purchases made in or around 2014.

Otherwise it is just stamp duty and conveyancing fees.

Maybe an estate agent should set up a landlord matching up service

 

[charlie007]

Maybe an estate agent should set up a landlord matching up service

I was wondering about that.

Afterall B&B of houses is more apt than that of shares

 

[Annieindublin]

Tinder for landlords

 

[ClubMan]

Or the rate falls. Or they relax the rules, for example the long-overdue reintroduction of indexation relief.

Or the property reverts to being/becomes a PPR (including under the "dependent relative" rule if/where applicable) and any effective CGT liability gradually diminishes over time?

 

[ClubMan]

CGT will be a cost, but they might be each entitled to the relief for purchases made in or around 2014.

Just to clarify as some people still seem unaware of this...

Property acquired between 7 December 2011 and 31 December 2014

This page explains relief available for land or buildings acquired between 7 December 2011 and 31 December 2014

www.revenue.ie