Sell house or keep as investment

feartheclaw

Registered User
Messages
23
Age: 46
Spouse’s/Partner's age: 41

Annual gross income from employment or profession: 75k + potential bonus 10-20k - bonus not guaranteed and less so with C-19
Annual gross income of spouse: Not steady but <20k

Monthly take-home pay: 5k (combined)

Type of employment: e.g. Civil Servant, self-employed: both private, me full time self employed , her part-time but sporadic income

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving more than we spend

Rough estimate of value of home: Approx 300k / paid 360k
Amount outstanding on your mortgage: 200k tracker / 16 years @ 0.8% - €1100 per month),


Other borrowings – car loans/personal loans etc: None

Do you pay off your full credit card balance each month? Yes

Savings and investments:
60k savings should be up to 70-80k by year end / 30k in shares + ETF

Do you have a pension scheme?
Yes, contributing approx €1100 per month through own company - Current Value €100k

Do you own any investment or other property?
No

Ages of children: None

Life insurance: no, mortgage protection only

What specific question do you have or what issues are of concern to you?

Looking for a break from Dublin and to work remotely. This was always the eventual plan but wanted to hold onto the house as investment for retirement as pension was started late. My question is whether I should sell the house using the €100k for this purpose or keep the house as an investment as planned and get a bigger mortgage.
If staying put the house needs 10-20k refreshment works.

I would receive €1500+ rent for the Dublin house but I know that will be eaten into with tax implications etc

Any guidance or other observations on my overall situation much appreciated
 

Brendan Burgess

Founder
Messages
41,014
Are you buying a house where you are moving to?

How much will it cost?
How will you fund it?

On the face of it, your former home is a great investment

4822

Investment €100k( €300k - €200k)

If you pay the €100k off your new mortgage, you will save about €2,500 in interest, so if you don't mind the hassle and risk, keeping the property is the right idea.

Another reason for keeping it, any increase in value up to €360k will be free of CGT. And after that the CGT will be reduced as it was your Principal Private Residence for such a long time.

Alternative
Depending on which lender you have the mortgage with, you should be able to port the tracker to your new home.

That is less valuable these days as the new rate would be c. 1.8% - still below what you can borrow at, but as big a gap as before.
 

Brendan Burgess

Founder
Messages
41,014
The decision should be reviewed every few years - maybe on the termination of the next tenancy.

As you pay capital off the mortgage, the value that the cheap tracker contributes to the deal becomes less and less.

If the house recovers to the price you paid for it, the CGT break becomes less advantageous.

And you then have less time to contribute to a pension fund.

So it could well be the right decision to sell it after 5 years and feed the proceeds into your pension fund.

Brendan
 

feartheclaw

Registered User
Messages
23
Are you buying a house where you are moving to?

How much will it cost?
How will you fund it?

On the face of it, your former home is a great investment

View attachment 4822

Investment €100k( €300k - €200k)

If you pay the €100k off your new mortgage, you will save about €2,500 in interest, so if you don't mind the hassle and risk, keeping the property is the right idea.

Another reason for keeping it, any increase in value up to €360k will be free of CGT. And after that the CGT will be reduced as it was your Principal Private Residence for such a long time.

Alternative
Depending on which lender you have the mortgage with, you should be able to port the tracker to your new home.

That is less valuable these days as the new rate would be c. 1.8% - still below what you can borrow at, but as big a gap as before.
Thanks Brendan
Yes ideally we would buy - would be looking around the €300k mark which should get a decent house outside Dublin.
Current house is a small city cottage so looking for space and garden.
Funding it through savings and mortgage.

Regarding keeping the PPR as an investment I will still have mortgage payments of approx €13k - so assume that leaves me in a negative position until its paid off?
 

Brendan Burgess

Founder
Messages
41,014
I will still have mortgage payments of approx €13k -
Yes, you will generate €6k profit after expenses and tax.
Your 13k repayments include 2k interest included in the above

So your cash flow negative will be €5k a year, if I have done my maths right.
But that is because you are clearing the loan.

Which is a very important point. If keeping the house means you will be under cash flow pressure, then sell it.

Brendan
 

feartheclaw

Registered User
Messages
23
Just to pick up on this again - the move would be a lifestyle decision and is only one option.
The other option is to stay put for another few years. If I'm to do this should I be putting more into the pension?
Also, as I'm 46 at what point will a bank not give a mortgage if we decide to wait?
Thanks again
 
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