Investment property | €320k |
Less mortgage | (€80k) |
Home | €130k |
Cash | €100k |
Net assets | €470k |
I am assuming that Dublin rents and house prices will be a lot lower in the coming years
You will not get 6% anywhere else and many properties achieve more.The arguments in favour of keeping your home
- Rental yields are very good at the moment. The rent would probably be around €18,000 a year. It would be hard to get a 6% gross yield anywhere else.
- ...
- It might be useful to own in future years if your kids are living in or working in Dublin.
YesIs this the correct summary?
I'm in the process of organizing this.First of all you should definitely max your pension contributions to use up the 40% tax level.
Seems reasonable, property speculation is not where I want to be but I've been burnt before with investments so wary.I would suggest that you should invest in this in a portfolio of shares for the best long-term return. It is also the most liquid and most flexible. It is also the least hassle.
The arguments in favour of keeping your home
- Rental yields are very good at the moment. The rent would probably be around €18,000 a year. It would be hard to get a 6% gross yield anywhere else.
- You have a cheap tracker. But as it's small in relation to the value of the property, this is only a minor consideration.
- It might be useful to own in future years if your kids are living in or working in Dublin.
~290k and as we are still officially residing in it for another few weeks while finishing renovations in the new place, we are not subject to CGT.How much did you pay for your home initially?
...
If you paid less than €320k, you probably should sell it now, as the gain is not subject to CGT. But as it will no longer be your family home, any gain already made, will be subject to some CGT.
I'm basing this on the fact that prices seem to have peaked now and if/when supply meets demand I assume prices will drop, possibly significantly based on the amount of proposed development in our area.We do not speculate on property prices here, but this [...]is a surprising assumption.
So the best investment of my €€€ is the current house?You will not get 6% anywhere else and many properties achieve more.
Good point, have considered this.If you sell the house, it is likely that your family will never again be able to own a property in Dublin. This is true for most families. This has been true in London for a generation, and its coming to Dublin.
Have considered all of this, someone mentioned to me that there's a possibility that only lower rate of tax may apply if my wife rents the house not me? (House is in my name only however)All the financials say you should keep it but being a landlord particular a remote one is not easy and a lot of existing accidental landlords seem to be leaving the sector. Depending on your tax rate you will most likely be paying revenue at least 50% of your profit between tax and USC. If you decide to keep it might be better to get an Agency to deal with it and that will also be a cost. If you live down the country and the heating breaks down you need someone in Dublin who can handle the situation for you.
If you sell the house, it is likely that your family will never again be able to own a property in Dublin
If you want a high-yielding property investment and/or place for your kids to eventually live in Dublin then buy an apartment.
If you sell the house, it is likely that your family will never again be able to own a property in Dublin.
While this is possible, it is not "likely."
If you sell the house, it is likely that your family will never again be able to own a property in Dublin. This is true for most families. This has been true in London for a generation, and its coming to Dublin.
Rate is actually ECB + 0.75%, original post updated.@Fat Tony
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- A tracker rate of ECB+0.25% really is exceptionally cheap money and the interest payments are now fully deductible for income tax purposes...
Rate is actually ECB + 0.75%, original post updated.
Indeed some people suggest that it is true already, that the average family cannot afford a house in Dublin.
If the OP invests the proceeds in the stockmarket, it is very likely that he will be able to afford to buy a house in Dublin when he needs it.
I think the obvious answer is 2).
Letting isn't without risk and overheads.
For most investment strategies you do best by holding for long and avoiding transaction costs.
Which makes more sense?
1) sell the house, put the proceeds in a risky asset. If the asset declines you may not be able to afford a house in Dublin, while any increase will be taxed. Also pay transaction costs twice.
2) hold on to the property and let it until you need it for your own purpose.
If you sell the house, it is likely that your family will never again be able to own a property in Dublin.
Let's face it, with the current prices of property in Dublin, a house valued at €320k is ~20% below average so factors like size, condition, area, facilities all need to be considered. The value of that property and may not follow the overall housing market.
Perhaps, but not by very much. The Dublin property market is pretty liquid and neighbourhoods don't shift in relative value very rapidly. When there's a boom all prices go up, opposite for a bust.
If you want a hedge against Dublin property, the only way is to hold Dublin property!
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