Sell investment property and buy shares

C

Cameo

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So the tenant in an investment property I own has given notice to leave and I have the opportunity to sell.

I am thinking I should sell and buy shares {partly influenced by one or two people on here)

Property might sell for 525k
No mortgage
Current rent is about 22k pa

Capital gain and expenses of 100k

So I’d have approx 425k to invest in shares which should potentially generate the same income before tax and expenses (I’m assuming I’ll invest in around 15 shares which have a 4% to 5% dividends)

Advantages as I see it are

1. Lower concentration to property, already have two other investment properties
2. Improved liquidity, can sell some share if I need money in a hurry
3. No political interference risks, being unable to sell, huge loss in value due to tenancy for life etc.
4. Help improve supply for one buyer
5. No hassle, large one-off expenses etc
6. More diversified income generation

Disadvantages
Crystalising a capital gain now that I could defer if I don’t sell now
Don’t think I have any capital losses I can offset against the gain


Q1. Is it a good idea, what am I missing?
Q2. Rather than pay tax annually on the income from shares is there some way I can buy shares and defer income until I need it in the future

Thanks in advance

Cameo
 
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Cameo said:
Property might sell for 525k
No mortgage
Current rent is about 22k pa

Capital gain and expenses of 100k

So I’d have approx 425k to invest in shares
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I don't really understand this. Are you sure that you're crunching the numbers correctly and factoring in CGT on any assessable gain?
 
ClubMan said:
I don't really understand this. Are you sure that you're crunching the numbers correctly and factoring in CGT on any assessable gain?
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House was bought for 265 so I am estimating CGT as 33% of (525-265-10) so around 80k, adding on another 10k to cover estate agent fees and legals costs
 
Cameo said:
2. Improved liquidity, can sell some share if I need money in a hurry
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This is very important.

At some stage you might want to help your children get on the property ladder. When you do, you can just sell some shares. If you have 3 properties, you might not be able to sell them when you want due to the market or restrictions on the sale of property with sitting tenants.
 
Brendan Burgess said:
Agree with everything except this small point. You help the supply for one buyer but so what? Selling a property does not increase the supply. There will be one fewer to rent if a home owner buys it.
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I am at the margin as the house which is a 3 bed has only one occupier currently; I’d be planning to sell to a family so help utilisation albeit at the margin

I guess I am assuming the tenant moves to a 1 bed unit which I suspect is the case here
 
I think it is a good idea, it is what I will be doing.

I suppose the downside is that shares are a bit more volatile than property, you can invest €100k in AIB let's say and tomorrow your shares might only be worth 97k. That said, if you can put up with the volatility, pick conservative shares with decent dividends and are in for the long haul, you should be fine.
 
Fortune said:
That's only because the illiquidity and non-fungibility of property gives less information on price than shares.
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Just to explain this in layman's terms.

Imagine if you put your home on the market every day. It would go up and down in value like a yo-yo, well likes shares.

Brendan
 
Cameo said:
Q2. Rather than pay tax annually on the income from shares is there some way I can buy shares and defer income until I need it in the future
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Buy one All World accumulating ETF and they’ll choose the companies to invest in, rebalance regularly and reinvest your dividends for you. You pay tax once every 8 years.
 
Zenith63 said:
Buy one All World accumulating ETF and they’ll choose the companies to invest in, rebalance regularly and reinvest your dividends for you. You pay tax once every 8 years
Click to expand...
Need to do more research but are they’re equally weighted share versions?
 
Zenith63 said:
Buy one All World accumulating ETF
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Not a good idea for someone with other assets with unrealised capital gains. They are in separate tax channels so you can't set the losses on one against the gains on the other.

Which raises the issue. Make sure to sell your investment property after 31 December. If you invest in shares, some will probably fall in value before the end of 2026. You can sell these and set the losses against the gain on the property.

Brendan
 
Cameo said:
Need to do more research but are they’re equally weighted share versions?
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Not really sure what you mean by this but the ETF in question aims to mirror the FTSE All World Index:
www.justetf.com

Vanguard FTSE All-World UCITS ETF (USD) Accumulating | A2PKXG | IE00BK5BQT80

Key facts and comparisons for Vanguard FTSE All-World UCITS ETF (USD) Accumulating (VWCE | IE00BK5BQT80) ➤ justETF – The ETF Screener
www.justetf.com www.justetf.com

Description​

The Vanguard FTSE All-World UCITS ETF (USD) Accumulating seeks to track the FTSE All-World index. The FTSE All-World index tracks stocks from developed and emerging countries worldwide.
Click to expand...
 
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