Move into house or lose deposit

The Novacastrian

We are looking for some advice please, sorry its a bit long...

We have a 2 bed apartment, 850sq ft, large kitchen/ dining room, living room - all very roomy. Value is over €300k.

Six months ago we put a deposit on a 3 bed end terrace, off plans, it is 970sq ft. We haven't got access yet but by looking thru the window, we see a relatively small kitchen and a similar sized living room. We have paid €20k deposit on this which we would lose if we pulled out. house value is over €400k, and in a good area.

We want to know should we forfeit the house and stay in the apt and wait till we can save for something we really want or sell the apt and move into the house as a starter for a few years.

Monthly mortgage payments on house will be over 1.5 times that of apartment.

any advice much appreciated.

godtabh

Can you not sell the house? It may have gone up in value

Magic Pips

Can you manage to keep both? Rent out the apartment for a year?

The Novacastrian

Thanks for the replies but...

To sell the house, the next buyer will have to pay stamp duty. We are not sure if they have gone up in value but there are 4 units still unsold at the launch price.

In order to rent out the apt, we would have to pay stamp duty on it of over 10k, also rent just about covers the mortgage at present rates, we would have to pay for the month or 2 while we try and get tenants and pay the management fee and furnish it.

godtabh

goslie wrote:

Thanks for the replies but...

To sell the house, the next buyer will have to pay stamp duty. We are not sure if they have gone up in value but there are 4 units still unsold at the launch price.

In order to rent out the apt, we would have to pay stamp duty on it of over 10k, also rent just about covers the mortgage at present rates, we would have to pay for the month or 2 while we try and get tenants and pay the management fee and furnish it.

The last thing I would do is give up 20k.

You have to make your mind up on the options you have

Zambia

goslie wrote:

To sell the house, the next buyer will have to pay stamp duty. We are not sure if they have gone up in value but there are 4 units still unsold at the launch price.

Well if there are 4 units unsold chances are your chances of selling yours quickly are slim

To clarify your question
Your not that keen on this house you brought of the plans. And want to pull out

I am afraid you already know the answer here your in between a rock and a hard place either way you turn you could get caught financially. I think you have to sit down and list exactly the two decisions weighing up Stamp duty on the new house , increased transport , Electricity , utilitys , bin charges anything that may effect your future finances. Also factor in a 1% rise in interest rates(

Deduct each case from your wages and see how you end up. I personnally would go with the cheaper option.

Sorry mate your losing money on this anyway which way you turn, but with the info you have supplied thats what i see.

Sponge Bob

If there are 4 units left at the launch price then its worth the launch price max or possibly even less than the launch price.

€20k is 5% of the cost of the new gaff but your stamp duty will be 7.5% of €400k as a non FTB, thats €30k which will be taken away by Brian Cowan.

Walk away, you OBVIOUSLY cannot handle 2 mortgages and €30k cash for Brian can you !

Your solicitor may well be able to get the deposit or maybe half the deposit back, it happens all the time especially if you have a desirable one booked and someone else wants it , then you usually get all of it back .

The Novacastrian

just to clarify....

if we sell the apt then we do not have to pay stamp duty on anything, if we keep it, it becomes an investment property and we would owe 10k.

buying the house - there is no stamp duty as it will be our PPR.

thanks for all your replies

Afuera

goslie wrote:

buying the house - there is no stamp duty as it will be our PPR.

This is incorrect. The big deciding factor for stamp duty is whether you're a FTB or not.

Even a FTB would have to pay stamp duty on this house, as it's over the threshold. Sorry to have to break it to you, but since you're a second time buyer you'll be charged 7.5% as Sponge Bob stated.

kmick

Some contracts allow you to sell on your interest in a property on plans. I think it is called flipping. Your solicitor would need to investigate. This would solve all your problems. The only thing it would cost you is the solicitors bills (1.5-2k).

As you say in your scenario the new buyer would have to pay stamp so you could never sell. You will have to pay stamp duty on it at 7.5%. So in order to sell you would have to get 107.5% of what it cost you. then the buyer would pay 7.5% on top of your price. Ouch

I would say if your rent on the apt covers the mortgage on it you are safe. Take the stamp duty hit on the apt and move in to the house. The bank will lend you the extra money if you dont have it as you will have equity in your apt. If they wont go to another bank the market is cutthroat at the moment.

The Novacastrian

Afuera,

Originally Posted by goslie
buying the house - there is no stamp duty as it will be our PPR.


This is incorrect. The big deciding factor for stamp duty is whether you're a FTB or not.

Even a FTB would have to pay stamp duty on this house, as it's over the threshold. Sorry to have to break it to you, but since you're a second time buyer you'll be charged 7.5% as Sponge Bob stated.

No, sorry, it is not incorrect - it is a new house under 125m^2, so no stamp duty as PPR.

Stamp duty only liable on apt if we keep it and rent it out, if not rented there is no clawback.

kmick
we are still waiting for our solicitor to contact us about this (flipping).

Afuera

goslie wrote:

No, sorry, it is not incorrect - it is a new house under 125m^2, so no stamp duty as PPR.

Sorry, I stand corrected.

antoinolachtnai

What kmick is talking about is called 'an assignment' in legal jargon, and I would advise you refer to it as that when you are talking to the solicitor, builder or agent.

This probably depends on the vendor being willing to allow you do this. And obviously, on you being able to find a purchaser. You might have to pay an estate agent to do this (say 1.7 percent including VAT = EUR6800) as well as the solicitor (maybe 2000 euros including VAT depending on the work done to date).

If I could not assign it or somehow get most of the deposit back, I would seriously consider moving into the house, even if it isn't quite perfect. 20k will take a long time to save. This is just a view, but a house will probably appreciate more than an apartment especially if it is in a good area.

It won't feel as small when you are actually in it. Go ahead and check (with a measuring tape, from the outside) whether the house is actually the area it is supposed to be.

Best of luck whatever you do!