Thanks cremeegg - we dont rent out the holiday home - its for our own use only
they have an income of €10,800 and costs of €4,600 on property 2.
They also have the potential upside of a capital gain.
You say her costs are €4,600. But she has equity of €160k! As you right point out, she can get a return of 5% on €90k of this and 3.5% on the balance. So her true costs are
€97 k@ 4.73% = €4,000
€90k @5%= 4,500
€70k 3.5%=2,500
Tax on rental profit= €3,000
Total "costs"= €14,000
Two counter-arguments.
Firstly,there is also the potential of a capital loss.
Secondly, they already have plenty of property - so they will benefit from any rise in property prices.
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