Thinking of building new house and renting old??

N

neo

Guest
Basically I am thinking of building a new house and renting my old house, but I am not sure wether to go through with it or just sell my old house and put it against my new mortguage.

I bought my old house for 174,000 and it is worth 300,000 now.
the mortguage is about 800 euro a month. Rental on this 3 bed would be 900 per month.

The cost to build my new home is 260,000 euro. I am just wondering what the hidden costs if any there would be and if it is feasible. I am also worried that the renting market is going to get saturated with houses.

Any help appreciated.
 
How mush is outstanding on the current mortgage?
It is only the interest on this amount that will be allowed to be deducted against any the rental income?

Also, since any capital gain (CGT) that could be made now would be tax free, an increasing amount of capital gains tax would fall due the longer it is rented

Finally, and most importantly, rental income of €800 pm does not justify holding onto as asset of €300k

You could depedning on where you are living least trade down to a cheaper house, CGT free, pay the stamp duty on new purchase, still collect €800 pm and have a sizebale amount of money left over to reduce your new mortgage on your new home

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The outstanding mortguage is the same as we got a top up when we got married so it is still at 174,000.
 
Fair enough but the amount allowable to be offset, for tax purposes, against rental income will be the amount less the top-up
i.e. the amount used in the purchase of the property less any amounts repaid
 
We kept our house and built another,but in our case the rent covers the new mortgage.My advice to you is to sell and get 60% LTV mortgage from NIB which is a tracker @2.95%.Your new House will already have equity which can be uesd as leverage to buy for example,a leasback in France.
 
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