Should i sell dublin 3 bed house now?

[goldenb]

Purchased 3 bed house in Dublin in 1998 and moved to Cork in 2001 and rented out house in Dublin since.
Rented myself in Cork up until 2 years ago 2006 when i bought a house for 378 which is now 315.
I had to remortgage dublin House to buy it and now I pay mortage of 50%on Cork house and 50% of Dublin house. I also have to pay tax on rental income of Dublin house and dont have enough interest to offset tax as eventhough i have high borrowings on it this interest does not offset tax.

Would it be wise to sell Dublin house now as rental income is not covering increasing mortgge costs of Dublin House??

I would be grateful for all advice.

goldenb

 

[ClubMan]

Purchased 3 bed house in Dublin in 1998 and moved to Cork in 2001 and rented out house in Dublin since.

Did a clawback of stamp duty arise and, if so, did you discharge it or could it remain outstanding?

Rented myself in Cork up until 2 years ago 2006 when i bought a house for 378 which is now 315.
I had to remortgage dublin House to buy it and now I pay mortage of 50%on Cork house and 50% of Dublin house. I also have to pay tax on rental income of Dublin house and dont have enough interest to offset tax as eventhough i have high borrowings on it this interest does not offset tax.

Remember that only the interest on the amount outstanding on the Dublin house mortgage can be set against rental income - not any additional amounts subsequently secured on it (unless used to renovate the property). If you have been doing otherwise then you could have been filing incorrect returns.

Would it be wise to sell Dublin house now as rental income is not covering increasing mortgge costs of Dublin House??

What was your original "business plan" for this house? E.g. making money on an ongoing basis from net rental income? Capital appreciation? A bit of both? Something else?

 

[DerKaiser]

the basic issue is that tax relief in respect of rental income cannot be claimed against most of the mortgage interest payable (as the remortgage was not for reinvestment in the property itself). This is really a property investment question, but it seems to me that the market will have priced in available tax breaks and if you're not getting them you're losing out. In theory you'd be way better off selling it and buying a new property (no stamp duty) where all of the interest could be offset against your income tax.