Want to buy 2nd home, rent out first one

B

bullvine

Registered User
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Hi All,

Perhaps sombody can help, I have a house worth over 500k, my mortgage is less than a 100k owed. Me and the Missus have seen another house we would like, however we cant sell our house for at least a year due to a issue that needs to be sorted. We were hoping to buy the other house and rent out our current one to some friends, hence cutting the repayments. However to do this we need to get a 100% mortgage but because we are not first time buyers this is a problem, they will not give us the full amount only the 92%.

Does anybody have any advice about this, do you think there is anything that I can do. Is there any bank that would give a 100% mortgage to a 2nd time buyer.

Thanks for your help

Cheers.
 
Not an expert, but wouldn't renting out your current property expose you to Capital Gains Tax on the profit? No CGT on your primary residence and it would cease to be your primary residence.
 
OutWest said:
Not an expert, but wouldn't renting out your current property expose you to Capital Gains Tax on the profit? No CGT on your primary residence and it would cease to be your primary residence.
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That only applies to the time that it is rented out - any increase in value while the house was the PPR is not taxed
 
gearoidmm said:
That only applies to the time that it is rented out - any increase in value while the house was the PPR is not taxed
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There is also a 12 mth grace period during which time you can sell the house and it's still considered to be your PPR.
 
You could either increase the mortgage on your current house to provide the deposit or cross-charge the two properties so that you are borrowing on the combined security. This assumes of course that your incomes are enough to cover the entire debt (although lenders will take the rent into account).

Sarah

www.rea.ie
 
Am I correct in thinking that the revenue apply a straight line to your gains i.e. bought for 250k and sell for 500. If you have rented it out for 2 years then 100k is liable to cgt.

If so this will become more important going forward.

For example if bought house for 250 and now 5 years later it is worth 500.

Assume you rent it for 5 years. Then you sell it for 500k ie no gain for 2nd 5 years.

The revenue would say 500 less 250 over 10 years equals 25 gain a year hence CGT on 125k. However in fact the property has not got up at all in final 5 years.

If all of this is correct then alot of amatuers who have rented out PPRs when trading up could lose alot to CGT in a few years as revenue's straight line gets them ?
 
How CGT is calculated on properties that were once PPRs and are subsequently rented out is explained in detail in many existing threads.
 
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