Trading up should I keep my present home which is mortgage-free?

L

Lambchops65

Registered User
Messages
79
Hi there,

I'm looking for some advice regarding finances and planning for my future.

Current situation is:
Single, age 46. No kids. Monthly pay (after taxes, medical etc) €2,900.
Car loan €235 mth (paid in full June 2022)
No other loans, just the normal bills!!

Current home (PPR):
4 bed semi - no mortgage (fully paid off 6 years ago)
House worth approx €420,000

Parents home (family home - inherited):
Just gone sale agreed @ €380,000 (no mortgage on this)

New home:
My dream has always been to live in a detached home (allergic to all noise lol)
I've gone sale agreed on a new home €649,000
Mortgage will be €173,000 (the rest will be from savings and sale of parents home)
If I didn't make the move to detached now, I'd never be able to do it so thought why not.

Question:
I plan on renting out my current 4 bed semi after I move into my new home.
Rent should be approx €2,000 pm (before taxes etc)

Is this wise? I'm thinking long term and having a viable asset. Have never been a landlady though...
Would I be better selling and paying off the €173,000 mortgage? putting the remainder in a savings account?

Trying to see what makes best financial sense. Any help appreciated. Thanks.
 
Yes, you would be better selling off.

The government and opposition has made it quite clear that they do not want private landlords. If you let the house, you may never be able to sell it at the market price.

Thinking of selling a rental property? You should probably get a move on...

The Tanaiste confirmed today that the Government will not be opposing a Labour Bill that seeks to provide greater security of tenure for tenants. The Bill will remove the ground which allows a landlord to end a tenancy on the basis that they intend to sell the property within three months...
www.askaboutmoney.com

Sell the house.
Pay off your car loan.
Max your pension.
Put the remainder into a diverse portfolio of equities

And then watch as the government turns the screws even further on private landlords.

Brendan
 
At 46 i think you're young enough to consider property investment

If you can put 18k off the mortgage each year then you'll be paid off aged 56 at which time you might want to retire.

Tax considerations:

I'm not sure you will get tax relief from the loan because the borrowing is on the pdh but maybe there is some sleight of hand you can do in your borrowing.

Also if you plan ever selling your old home, you'll be subject to cgt. This will increase over the years. The cgt might outweigh any rental income. Something to consider.
 
Last edited:
Interesting. Like my friends, two very different opinions...haha.

I didn't realise I would have to pay CGT on my PPR? I've already paid it on my parents estate and will also have to pay on my parents house...it's never ending..

I'm still not sure what to do tbh. Don't think I am going to rush into a decision and wait until I am in my new house (fingers crossed). It is lookin like the family selling the home I am planning on moving into will now need to rent for a year so suppose I could also rent to them?

A lot of decisions, thanks guys. :)
 
Lambchops65 said:
I didn't realise I would have to pay CGT on my PPR?
Click to expand...

You don't while it's your PPR

In very simple terms, you get relief for the period while it was your PPR.

So if you sell a house after 10 years as your home followed by 10 years letting it out, the taxable gain will be reduced by half.

It doesn't matter when the gain actually happened. So if the house is worth the same today as when you bought it 10 years ago and it increases by €100k over the next ten years, your taxable gain will be €50k.

Brendan
 
personally i would sell it, market values are high, the hassle with a private rental isnt worth it and you can maximise your pension and investments in equities which is much much less hassle.

Congratulations on the new house!
 
I wouldn't sell. My sister is in the same position also as yourself. It might make financial sense or tax sense to sell now but what I keep telling my sister is you can't predict the future except she has a debt free asset that generates income every month. You can't put a price on that piece of mind. Interest rates have never been as low so don't see it as major concern taking on the small mortgage especially with inflation starting to rise. Its all abouy easy life and less worries the better in my book. Enjoy your life knowing you have a insurance policy that you are in control off.
 
ned official said:
I wouldn't sell. My sister is in the same position also as yourself. It might make financial sense or tax sense to sell now but what I keep telling my sister is you can't predict the future except she has a debt free asset that generates income every month. You can't put a price on that piece of mind. Interest rates have never been as low so don't see it as major concern taking on the small mortgage especially with inflation starting to rise. Its all abouy easy life and less worries the better in my book. Enjoy your life knowing you have a insurance policy that you are in control off.
Click to expand...
I think that you are really not in control of your asset. If your tenant decides not to pay, you are stuck without that income for years until you can evict. You will still have to pay LPT, insurance, etc.
So whether your asset generates income or not will be at the whim of this one person who can decide to stop paying at anytime.
Also, I would not want to deal with doing repairs, etc. in the current climate where tradesmen are so busy.
 
ned official said:
I wouldn't sell. My sister is in the same position also as yourself. It might make financial sense or tax sense to sell now but what I keep telling my sister is you can't predict the future except she has a debt free asset that generates income every month. You can't put a price on that piece of mind. Interest rates have never been as low so don't see it as major concern taking on the small mortgage especially with inflation starting to rise. Its all abouy easy life and less worries the better in my book. Enjoy your life knowing you have a insurance policy that you are in control off.
Click to expand...
being a part time landlord is not the easy option.
 
Bilbo1 said:
I think that you are really not in control of your asset. If your tenant decides not to pay, you are stuck without that income for years until you can evict. You will still have to pay LPT, insurance, etc.
Click to expand...
Every investment has risk.

Residential property in Ireland can generate a gross 10% yield which is quite a lot.

You have to ask yourself whether the investment is personally tolerable for the risk involved.
 
Lambchops65 said:
Parents home (family home - inherited):
Just gone sale agreed @ €380,000 (no mortgage on this)
Click to expand...
You will presumably have to pay some inheritance tax - the agreed price for the house alone is above the Group threshold.

You will also have stamp duty and other costs associated with the new house purchase.

In your shoes, I would sell your current home, clear all your debts and maximise your pension contributions for 2020 and going forward.

Simplicity is the ultimate sophistication.
 
ned official said:
I wouldn't sell.
Click to expand...

ned official said:
Its all abouy easy life and less worries the better in my book.
Click to expand...

That is why he should sell.

Max the pension contribution and invest the rest in a portfolio of equities. They will rise and fall as will the value of property. But you won't have the worries about tenants and anti-landlord sentiment.

ned official said:
When the asset is gone its gone.
Click to expand...

Not really. They can buy another property at any time, if sentiment changes. If they were setting out today to invest in property, they may well choose a different property more suited to an investor.
 
You must log in or register to reply here.
Back
Top