Rent from investment property : €12K - Worth €200k, Mortgage - 10 years left at 0.8% tracker (€55 remaining)
A 5% yield is not good for a rental propertyThe rental income would be about €10000PY and the cost of the property would be about €200K.
Your net yield is going to be squeezed by these charges and you will pay 4-ish% if you get a BTL mortgage.There would also be management charges and site fees and we wouldnt live near it. If its empty we would use it as a holiday home for those periods.
Item | Amount (€ 000) |
Gross rent | 10 |
Charges | 1 |
Mortgage interest on €120k@4.2% | 5 |
Net profit | 4 |
Profit after tax @50% | 2 |
A 5% yield is not good for a rental property
It's not for me personally.What would you consider an acceptable yield?
What i really want to know is are we mad to go for this?
If we made a loss on this investment property for a few years, is this loss allowed against the profit on the other rental property?
Say worse case scenario it was empty for 10 months. If rent taken was €2000. Expenses was €6000 (€4000 interest + 1000 management + 1000 maintenance), so a loss of €4000.
How would that effect our total tax situation between the two properties.
Im not saying I envisage things being that bad, but you never know and id just like to figure out what happens in that scenario?
For the new property it has planning as a holiday home. We were thinking of doing Airbnb (would that make a difference to the calculations).
Under the assumption that you plan on entering into a long-term letting arrangement with both properties (A & B):
Any loss on property B can be used to offset a profit on property A in calculating your Case V assessment for the year
You mentioned that the property has planning permission as a holiday home. Is it part of a purpose built holiday 'village' type setup?with a view to retiring to it in the country eventually.
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