Sell old house D4 & invest in apartment - tax implications?

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miselemeas

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I own an old 2-up 2-down house in D4 which is rented out. I am thinking of selling and re-investing in an apartment to rent. Valuation is around €470,000 at present. The house would need a complete makeover as there is no central heating and has low energy rating. What would be the implications regarding tax etc?
 
Is that a Real value or a Hopeful value ? The type of property you mention is getting a real hammering at the moment. Regarding Tax how long do you own the property and was it ever your PPR ?
 
I have been looking at the market, so realistically I reckon at least 450k. The property was willed to me by my mother 4 years ago. I never lived there. Rather than put money into repairs, installing new floors, central etc, I thought an apartment might be a better investment in the long term, even though there would be management fees involved. I would be looking on the income to supplement future pension.
 
Well AFAIK the Tax implication would be the sale price less the value which was determined on Probate. Tax would be at 20% as a Capital Gain or you might have a loss which could be carried forward to use against other future losses.
 
mercman said:
Well AFAIK the Tax implication would be the sale price less the value which was determined on Probate. Tax would be at 20% as a Capital Gain or you might have a loss which could be carried forward to use against other future losses.
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Thank you very much. Are there any other tax implications I should be aware of?
 
CGT is payable on the full gain less any costs, especially if you did not use it as a PPR. It's a great time to buy at present but a rotten time to sell.
 
mercman said:
CGT is payable on the full gain less any costs, especially if you did not use it as a PPR. It's a great time to buy at present but a rotten time to sell.
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Thank you - I suppose I have nothing to lose by putting it up for sale and seeing what happens. Luckily, my tenant would have no problem with that. Houses on that particular street have always sold well for some reason (just beside Shelbourne Dog Track) so maybe I'll be lucky.
 
If the house is in such bad condition how then is it rented out in the first place ??? Maybe I have this wrong but did you say the house that is rented currently has no central heating & needs a complete makeover now that you want to sell it???
 
Cuppa - why all the question marks?

FYI - Yes, the house is rented out at present. I didn't say it was in a bad condition ("would need a complete makeover"?), because it's not, but that's what I would do personally if I was the buyer of such a property and wanted to make it my home. I have seen similar houses on the street after having a complete makeover ie attic conversion, inside walls knocked down, modern open staircases, marble floors, modern kitchen, surround sound, sleeping platforms, ceilings with downlighters, glass walls to let in more light at the back, etc etc and they look terrific. In other words, the buyer(s) would probably look on the house as a project to be enjoyed. I would imagine that is what a potential buyer would do anyway as the house is in such a good area for people working in the city.

Yes there is no central heating system as such, just wall mounted heaters with timers in all rooms and the tenant, who has lived there for 3 years, is very happy in the house. Mercman gave me the information I originally requested, thanks.
 
If there is no mortgage interest on this property at present I would imagine you have a big tax bill on your rental income - this should be a factor in deciding what to do. When deciding what to do you should seek professional advice, but some factors to consider are:

CGT on gain on property sold
Stamp duty payable on new property
Writing off mortgage interest as an expense in your new property (significant tax saving if you go interest only)
What to do with remaining proceeds of sale - are you maximising pension contributions?

IMHO a house is always a better long term investment than an apartment, so I would be wary about swapping a house in D4 for an apartment.
 
Thanks webtax, you have given me a lot of information there.

Mortgage - There is no mortgage interest so yes I am paying tax on the rental income.

Pension - As a public servant I am trying to negotiate a buyback option for part-time teaching, which was not considered pensionable employment at the time, but now is.

New property - I was hoping to pay cash as I am probably not young enough to qualify for a mortgage.

House v Apartment - I was thinking of the maintenance which is usually less of a problem in an apt. I feel that an apt on the Luas line could be a good investment.

Professional advice - solicitor or EA?
 
Investing in property really only makes sense if you are borrowing to do so - you would get a better return on cash by placing the money in the bank, and avoid all the headaches of being a landlord.
For advice on what to do you should speak to a properly qualified financial advisor and definitely not an EA.
 

Thank you webtax, appreciate your suggestion as I am not good on matters of finance
 
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