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Trading Up - What to Do?

  • 28-04-2007 8:37pm
    #1
    GreenHorn
    Closed Accounts Posts: 369 ✭✭


    Not sure if this is in the right section, but anyhoo...

    I'm buying a new house... Moving from my starter home into what I think will be the house I stay in for good (however long that may be!)...

    My question is this: I have always had it in the back of mind to hold onto my starter home to rent when trading up.

    How good an idea is this? I figured if I could make it work with the rental income going towards my new super-huge mortgage, I'd give it a crack as a long-term investment.

    However, if in a few years I decide to sell the first house, I'm eligible for a fairly large tax as it will no longer be considered my "family" home (can't remember the name of the tax!)... Is there any way around this tax and, in general, is it a good idea to try hang onto the first property even though it means I'll have a bigger mortgage?

    Taking into account the current subdued climate in the property world. I figured if I could even hang onto it for a year until the induustry comes through it's current funk.


Comments

  • #2
    Time Magazine
    Registered Users, Registered Users 2 Posts: 8,452 ✭✭✭Time Magazine


    Moving this to Accommodation & Property.


  • #3
    ronbyrne2005
    Closed Accounts Posts: 3,494 ✭✭✭ronbyrne2005


    You would be mad to do this now. Don't buy a new house untill you have sold the other one. Prices are falling if you havent noticed. you are risking your future by keeping the first property and getting a "super mortgage". The rental yield on properties is currently ridiculously low and this is why prices are falling. You dont sound like a serious investor so dont be tempted into being an amateur landlord.


  • #4
    patrickolee
    Closed Accounts Posts: 890 ✭✭✭patrickolee


    Something like this happened to my sister in the London area back in the early 90s crash. She bought a house, trade up, and the sale on her original house fell through, so she was left with two houses. Then the market crashed and she was left with negative equaity in both houses. ouch. Tough for a couple of years, she rented out one of them to their corpo. Course the market recovered a few years later and then she was laughing. Sold the second house and is now mortgage free.... point of the story is, if you're doing it for the long term, you really shouldn't worry about it too much. If you were hoping to sell up your starter home, within 5 years or so, then you probably shouldn't.


  • #5
    Victor
    Registered Users, Registered Users 2 Posts: 78,580 ✭✭✭✭Victor


    Can you afford it if it all goes wrong.

    Are you buying into too much property at a time when it is overpriced?


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