Well, if you are happy with that risk, on an after tax basis, then your current approach makes sense.and willing to take risk that investment return will outperform mortgage interest rate over time
Continously saying something doesn't mean it makes any sense.P,S Inflation will reduce the morgage repayment as time goes on.A lot of people including professionals do not seem to understand this.
thanks for the feedback, short answer is no and that is certainly worth doing as likely getting better return from share portfolio. If we were to sell it then would most likely put balance against home mortgage. We have tracker mortgage on that property so reluctant to give that up while rate is so low.Well, if you are happy with that risk, on an after tax basis, then your current approach makes sense.
Have you done a full analysis of the investment property? Is it worth keeping for the amount of equity tied up in it?
I'm the one who doesn't understand?!Well, Red Onion ,if you dont understand this simple thing. perhaps look back to the 50 years ago,where for example a morgage on an irish house would have been maybe 1 k euros for 20 years.
Clever bet...I bet you €10,000 we won’t see high inflation here in Ireland.
thanks for the feedback @Baby boomer , it is a net figure. The gross figure is €15.6K, so the €13K is after management fees, interest and some minor maintenance items. Mortgage on this property is approx €7K/ annum.You have 140k equity in your rental property. It's generating a rental income of 13k pa. Not sure if that's gross or net after interest and management fees, but even if it's gross that's a pretty good return on your equity. If it's net, it's even better. Any capital appreciation would be a bonus on top of that. Plus with a tracker, interest is very low anyway.
Keep it.
Normally I would say reduce exposure to property.Do you own any investment or other property? Yes, estimated value €220K
Rental income/ annum - €13K
Then it's a brilliant return. Of your 7k mortgage payment, probably less than 1k is interest. The remainder comes off the capital and grows your equity.thanks for the feedback @Baby boomer , it is a net figure. The gross figure is €15.6K, so the €13K is after management fees, interest and some minor maintenance items. Mortgage on this property is approx €7K/ annum.
Other borrowings – €78K mortgage on investment property which was our former home, no other debts.
Do you own any investment or other property? Yes, estimated value €220K
thank you @NoRegretsCoyote , I am aware of the CGT liability in the event we decide to sell and we actually paid €215K at the time so my €220K estimate is probably on conservative and there could be another €20 or 30K in equity based on recent sales in the area.Judging by your age and that you have a tracker I'm guessing you probably paid more than €220k for the property.
Just bear in mind that you will start to accumulate a CGT liability if the value rises above €220k.
If house prices rise this gain could be more than your annual rental profit.
Okay just beware that even if house prices don't change you will build up a CGT liability as proportionately the time you lived there becomes less and less. If you lived there ten years and tenants five years the liability is 5/15*Gain*33% but in five years it will be 10/20*Gain*33%.I am aware of the CGT liability in the event we decide to sell and we actually paid €215K at the time so my €220K estimate is probably on conservative and there could be another €20 or 30K in equity based on recent sales in the area.
thanks again for the input as I was not aware of this and while it is unlikely to influence my decision, it is good to know.Okay just beware that even if house prices don't change you will build up a CGT liability as proportionately the time you lived there becomes less and less. If you lived there ten years and tenants five years the liability is 5/15*Gain*33% but in five years it will be 10/20*Gain*33%.
It's not huge in the scheme of things but worth bearing in mind.
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