Should I sell my house or rent it out?

Hi Bushfire,

I think you should hold on to your house as an investment. My neighbour moved from Dublin to the country 2 years ago to look after aging parents. She rented out the Dublin house. It has appreciated considerably in value and she has the steady rental income.

kilomike
 
If you rented it out would the rent cover the mortgage?
Can you afford to cover anywhere up to two months per year void of tenants?

If the answer to both of these is yes then I would hold on it.

Not as an investment but eventually you will need somewhere to move back to; if you like the property/location and the costs are covered it's a no brainer, I think. Prices may freeze/drop in the short to medium term but if you see yourself as being happy there for a few year then ask yourself whether that matters.
 
If you were a first time buyer and availed of stamp duty exemption, then the property cannot be rented until you have owned it for five years. If you rent before this time then you will be liable for stamp duty clawback at investors' rates. If you sell there is no liability. When you sell the property eventually, you will be liable for capital gains tax at 20% for the period of time the property was rented.

No one can tell you what to do but I think you should bear the above in mind. Askalot also raised some good points. What kind of yield would the rental bring in? For example, if you sold and even put profit in high yielding deposit account, would you make as much or nearly as much profit, without the hassle? A landlord is responsible for maintenance and repairs, must register with PRTB and pay insurance.

If it were me, I'd crunch the numbers to see how they compare. By and large, I think I'd sell. Good Luck.
 
Another vote here for selling. Whatever your opinion about a property crash even the most bullish optimists are calling a 'soft landing' as we speak. Being a landlord isn't for everyone so i'd give serious thought to if it would be worth it per liteweights post above.
 
Bushfire said:
Hello everyone. I would be interested in some opinions on my situation. I bought my first home about three years ago but because of changed family circumstances involving my mother's illness I am moving back home for the forseeable future.
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Caring for someone is demanding enough. You probably don't need the hassle of tenants and the possibility of seeing the house fall in value in the coming years.

I'd say Sell. Invest wisely but treat yourself. Don't forget, it's very important for carers to arrange for frequent holidays to great locations.:cool:
 
Not sure with the legality of it but if you keep the house as your PPR and avail of the rent-a-room scheme you will still have a room in your house and your co-sharers rent will cover your expenses.
 
What liteweight says about stamp duty on selling within 5 years of house purchase as first time buyer is true. If you rent out the property within this time you may also be liable to income tax on the rent and capital gains tax on the profit. You will also lose first time buyers mortgage interest relief. That's four lots of tax even before you include estate agents and solicitors fees... and possible stamp duty on another residence in the future....150,000 may not go too far...

rent a room scheme may be way to go?
 
liteweight said:
If you were a first time buyer and availed of stamp duty exemption, then the property cannot be rented until you have owned it for five years. If you rent before this time then you will be liable for stamp duty clawback at investors' rates. If you sell there is no liability. When you sell the property eventually, you will be liable for capital gains tax at 20% for the period of time the property was rented.

If it were me, I'd crunch the numbers to see how they compare. By and large, I think I'd sell. Good Luck.
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Thank you so much to everyone who replied, you've given me lots to think about and mentioned factors I hadn't even thought about before.

But Liteweight's advice almost had me putting up the 'For Sale' today! I had no idea that I couldn't rent the house out for five years (I was a ftb and did avail of the stamp duty exemption) without the stamp duty clawback so that definitely changes things and makes me think selling is the best option.

I'm not even sure if the rent I would get for the house would cover the mortgage (1200 a month).

I will have a good read again of all the advice here and take it from there, any other comments would be very welcome. Thank you all again.
 
Bushfire said:
But Liteweight's advice almost had me putting up the 'For Sale' today! I had no idea that I couldn't rent the house out for five years (I was a ftb and did avail of the stamp duty exemption) without the stamp duty clawback
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Usually there is a grace period of 12 months max during which you can rent your PPR before selling and not have to pay CGT.

Does the same not apply to SD, e.g not have to pay SD clawback if PPR is sold after having been rented max 12 months ?
 
bacchus said:
Usually there is a grace period of 12 months max during which you can rent your PPR before selling and not have to pay CGT.

Does the same not apply to SD, e.g not have to pay SD clawback if PPR is sold after having been rented max 12 months ?
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No, stamp duty is payable the day you rent it out
 
Triplex, just to clarify...a FTB may sell the property without incurring any stamp duty clawback or becoming liable to capital gains.

The tax exemption threshold for the rent a room scheme is 7,620 per annum. If an owner/occupier charges over this, the total rent received becomes liable for income tax. Many people seem to assume that one can rent out a room, keeping one for private use, and still avail of the rent a room scheme. This is not the case. The owner must occupy the property.

On the plus side for renting out the property, mortgage interest can be offset against rental income as an expense, i.e. only interest on monies borrowed to purchase or renovate the property. However, even if you were to achieve 1200 pm, you wouldn't be breaking even due to added costs of PRTB, insurance etc. The heady days of huge capital appreciation are gone IMO and it seems to me that this is what you would be relying on if you kept the property. Being a carer is not an easy task, no matter how good the patient, or how much help one has. To put added pressure on yourself doesn't seem like a great idea to me to be honest.
 
On the question of stampduty clawback. Can anyone clarify the amount of clawback you have to pay. Eg a house bought 3 years ago for 425000 being rented out, how much would the clawback be.
It's worth while quantifying the pain.
 
A house bought for approx 425k would have had a stamp duty liability already if it was secondhand, although FTB would have paid a lesser rate. If new, stamp duty is based either on the price of the site excl. vat or one quarter the total price (425 - vat/4) if the property is over 125 sq.mts. If under 125 sq. mts. there is no stamp duty liability for an owner occupier.

If the property is rented then it's 425k, less vat @ 13.5%. Don't have a calculator on me at mo, but the balance is subject to stamp duty of 6% or 7.5%. Rates can be found on www.revenue.ie
 
bacchus said:
Usually there is a grace period of 12 months max during which you can rent your PPR before selling and not have to pay CGT.
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This is interesting and possibly something not a lot of people know about. Is this definitely true and not just hearsay? Is there a section on Revenue's website about this? I haven't been able to find anything about the 1 year grace limit.

Thanks.
 
Not correct, I'm afraid. Yes, you have a 12 month window in which to sell the property before you incur CGT but you'd have to leave it empty or let relatives use it rent free (a possible option?). If you let it the SD clawback becomes due immediately.

Sarah

www.rea.ie
 
Question:
A couple own 2 properties, one on the Northside, one on the Southside.
Can they move in together, keep one property as an "investment" with a room rented under the room for rent scheme. Both properties are in separate names. The girl does stay in her house a fair bit.
My opinion would be technically dodgy but in practice fine?
 
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