sell or rent out house

Leper

Registered User
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1,607
I'm not the greatest giving advice on finances, but having read and re-read this thread, I think you have a favourable attachment to your house. Also, I think your "former" wife has no attachment to the house. Like me, you're probably "not great with money" issues. I'm sorry you're in the situation you're in, but with no children involved most of your potential negatives are nullified.

If you're a grafter (i.e. work yourself to the bone like most chefs when the economy re-starts) and can keep the house in tip-top shape through your own labour I'd rent out the house/rooms/part-of-house until you get up and running again. I'd advise you to work towards your income being enhanced. I think your wife wishes to be onside too; count that as a win/win. She will get on with the rest of her life too.

If you sell your house your options are lessened although you'll have a few bob to bank. But, not a huge amount in the greater scheme of things. We don't know if there is a recession looming and neither do we know things will escalate financially favourably. Therefore, I advise on you hedging your bets and let out the house through the local authority or through an estate agent. You may wish to have your former wife buy in to your situation.

I hope I'm not causing offence to anybody whatsoever; I never wished to. I hasten to add that I've no financial qualifications whatsoever and neither would I have much knowledge of the legal consequences here. Whatever you decide to do I wish you and your former wife only what is best for both of you.
 

RedOnion

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5,990
But if all went well, we could hand it over to the council on a long term lease. An estate agent has told us we could get 2000 euro per month rent if we went private. The council pays 80% rent so that would easily cover the mortgage and i wouldn't be too bothered if we didn't actually make a profit from it.
All of my friends (who have no financial background!), suggest i should try at all costs to keep the house.
You're being overly optimistic with the financials here, so I think you need to sit down & work them out.

My initial thoughts:
As an investment this is cashflow negative. That means on top of the rent, every month you'll have to put your hand into your own pocket to come up with the cash to pay tax.
I've assumed your income is over 35,300 here, so the rental profit will be taxed at higher rate. Over 5 years, it'll cost you 17,000
That's using 3% interest rate, and 1600 per month rent, but only allowing for 600 per annum expenses to cover insurance, assuming you rent to council. (If you rent privately, the rent will be higher, but so will the expenses).
At the lower rate of tax it just barely breaks even, from a cashflow perspective. But your income would need to be under 24k for it all to be at the lower rate.

On paper it's a profitable investment, and the payments are increasing the mount of equity you have in the property. But you're basically being 'forced' to save money every month. Unless you can commit to putting in 300 per month of your own money this will tie you down.

Apart from the financials, I'd suggest you're better to make a clean break while you're both on good terms, rather than being forced to sell at a time that doesn't suit in the future.
 

Mcivor

Registered User
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9
I would recommend selling, take your c. €30K equity and move on with your life. Make sure to lock away this €30K and add to it over next few years once you're back working to build a deposit towards your next house possibly in Sligo where prices would be much lower than in Dublin so lower mtge required. Too many risks in trying to keep the house in Dublin as a rental incl that you will likely have to use your wages to supplement the mortgage repayments once taxes and expenses are taken into account. 20 year council lease means that you probably won't be able to purchase another PPR for yourself as Banks will take the current mortgage into account when deciding whether to offer you a 2nd mortgage, etc
 

Brendan Burgess

Founder
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44,626
It could possibly be 20 years before you might be in a position to sell the house if you both owned it and rented it to the council.

Lofty

If by any chance you decide to keep the property and rent it, Clamball's point is really vitally important.

Do not rent it to the council. If you do, you will be stuck for 20 years and your financial position may well change in that period.

So if you do rent it, stay flexible so that you can sell it is the right thing to do.

Brendan
 
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