tunnellight
Registered User
- Messages
- 28
I think it gets inherited minus a flat tax of 30%, but open to correction on this.* If I die , age 66 , my kids get nothing from my pension.
This is a pretty low pension for someone of your age and income. You are missing out on tax relief on contributions by topping up your mortgage like this.Do you have a pension scheme? Yes , 5% employer contribution , 10% by me , ~50K in pot
Just on this narrow aspect. Let us say the choice is between paying €100 off your mortgage and net €100 into your pension. The net €100 is in fact €167 gross. Death at 66. €100 inherited in case of mortgage and €117 (167 x (1 - 30%) in case of pension.I think it gets inherited minus a flat tax of 30%, but open to correction on this.
It's worse - it's actually an after tax loss of 3kBased on the numbers you have given us, the after-tax profit on the rental seems to be less than €3,000 per annum.
IMO that’s an insufficient reward for all the risks and hassle involved with running a property rental business.
In your shoes, I would sell the rental property, apply any equity that is released against the PPR mortgage and start maximising tax-relieved pension contributions for both yourself and your spouse.
Not sure that is the best way to look at it. Imagine that the equity in the property was only €1 then the return on equity would be near infinite.I’d look at it another way…there’s an after-tax return of around €3,000 a year on the OP’s circa €17,000 of equity in the property. That’s a return of almost 18% per annum…after tax!
It would, so with a long-ish term time horizon, why would you sell it.Not sure that is the best way to look at it. Imagine that the equity in the property was only €1 then the return on equity would be near infinite.
Be careful not to confuse profit and cash flow - bear in mind that at this stage the larger part of each mortgage payment is a repayment of capital (aka saving).It's worse - it's actually an after tax loss of 3k
This x 100.I think you also have to consider that this property has been burdensome for you for some time due to being in negative equity. Property prices are quite high at the moment, would you not kick yourself if you were to hold on to the place (for quite a limited return vs pension investment) and it fall back into negative equity in a couple of years time if prices were to fall?
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