Travel or buy?

LegacyUser

Hi there, I’m looking for a some advice from fellow board users. It is not a major personal issue as such but one that I feel I need to make a decision on very soon. Ok here’s the situation. Have been going out with my boyfriend for 3 years. We've just moved in together and are renting and things going great. I started in a new workplace in August which I really enjoy, lovely place to work with friendly helpful people. My boyfriend in job he doesn’t like so much but getting by. Now that we’ve moved in together, we’ve talked about buying a house in the not too distant future etc. and to be honest I do feel the pressure to make this step from others and from myself. I do want to buy with him but the thing is neither of us have really travelled that much apart from long holidays here and there. I’m wondering if before we make the step of buying the house and all that goes with it should we just up sticks and go travelling for a year without any responsibilities. We both have some savings (intended for deposit on house!) and could gather enough together to head off next Autumn on a round the world trip. My boyfriend thinks we could wait a while and see what happens but I feel maybe we should just go for it this year instead of hanging around. I do want to buy the house as soon as possible but just want to live a little with no responsibilities first. On the other hand my boyfriend, while wanting to buy with me, is in no rush whatsoever and wants to just see how things pan out. This may sound a little sad but I feel that time wise we are a little limited as we are fast approaching 30 and would like to do the big travel thing as young as possible while also being in a position to buy by the age of 30/31. I guess what I am asking is would people think it would be advisable to go travelling next Autumn despite leaving my nice job, spending all savings on travel and returning with little funds having to start saving all over again for a house. Would it be better to just buy the place this year and then look into travelling later? I’m confused as to what to do and want to get it sorted out in my head aswell as with my boyfriend. Any thoughts? Thanks so much.

ixoy

I understand where you're coming from and my advice to you is to go travelling this year before you get locked down in mortgage repayments. With house prices continuing to fall, the house prices could very likely be cheaper when you return, thus reducing any potential "loss" you feel you might have if you spend it travelling.

chump

ixoy wrote: »

I understand where you're coming from and my advice to you is to go travelling this year before you get locked down in mortgage repayments. With house prices continuing to fall, the house prices could very likely be cheaper when you return, thus reducing any potential "loss" you feel you might have if you spend it travelling.

++1

Stokolan

Go Travelling. I have turned down the opertunity to go travelling on too many ocasions and I cant stop thinking that I should have gone! Not that Im not happy here. I have agood job, great Girlfriend and Nice house! just she dont wantto travel so If I wanted to go Id have to go by myself :P

jank

You are a long time dead. Go travelling

pickarooney

Buy now, rent the house out for a year, go travelling.

estar

travel for 3-6 months

buy house late 08 early 09

SarahSassy

pickarooney wrote: »

Buy now, rent the house out for a year, go travelling.

Definitely !!!

Blackpitts

why u irish are so obsessed in buying a place no matter what?

it's just suicidal to buy a house now, the market is doing a big downturn and it's just a bad investment.
Go travelling instead or just keep renting and wait another year.

dudara

You say that you feel that you are under pressure to buy.

Just do what you want, taking your boyfriend's feelings into consideration of course.

Andy-Pandy

fLY IN TO HANOI, TRAVEL NORTH, THE lAOS, THEN cAMBODIA AND THEN tHAILAND. tAKE AS LONG AS YOU LIKE. iT WILL BE THE BEST EXPERINCE OF YOUR LIFE(bugger, to lazy to fix the caps)

Firetrap

Go travelling while you are in a position to do so. In the future, you might have kids, a big mortgage to pay, family responsibilities (as in parents not in good health, that sort of thing), perhaps less jobs available if you do quit to travel. Especially now that you're approaching 30 and things go soooo drastically downhill after that.

As for your house, have you looked at the news, listened to the radio or read a newspaper recently? There are a lot of people who reckon the housing market has stalled and that the already falling prices have a way to go yet. As it is, they're dropping month by month and that's likely to continue for a while. What major difference would it make to you if you went away travelling, then came back and started saving again for the deposit on your house?

ztoical

pickarooney wrote: »

Buy now, rent the house out for a year, go travelling.

thats what I was going to say

Suaimhneach

Yeah, with the prices of houses going down people are holding off on buying, so rent is going up. Get a house, set it up, dedicate an agent (better probably to have someone you know mind it really) and rent it out. That pays mortgage and you can come back to a nice place! Sorted.

mikemac

pickarooney wrote: »

Buy now, rent the house out for a year, go travelling.

I've seen a few people here advise this.
Are both of you First Time Buyers?

Are you aware that if you are and if you rent this house out:

1. Your tenant is responsible for deducting the tax you owe
2. You owe Capital Gains tax since your house has become an investment, not a home.

I'm no expert, I just pick this up in the Accomadation forum.

But yes, go travelling and buy a house when you get back.
Prices are heading down so you'd be mad to buy

Kaldorn

go travelling and wait a year and then buy,for all those who said buy now and travel,they are either very stupid or not good at maths...currently average house prices are in the region of 350 to 400k which adds up to monthly repayments of the guts of 2k or over depending on lenght of mortgage,do you know of anywhere where you will get that kind of monthly return on a rental property..i dont..maybe blackrock or D4..anyway in the normal renting world the average is between 1000 and 1500 rental income which wont cover your mortgage at all...go travelling now

pheasantplucker

Travel!

Mr. Incognito

I've seen a few people here advise this.
Are both of you First Time Buyers?

Are you aware that if you are and if you rent this house out:
Your tenant is responsible for deducting the tax you owe
You owe Capital Gains tax since your house has become an investment, not a home.

I'm no expert, I just pick this up in the Accomadation forum.

But yes, go travelling and buy a house when you get back.
Prices are heading down so you'd be mad to buy

This is incorrect. Kindly post a link to the Accomodation forum where this was posted. CGT is only payable on the sale of a capital asset, not purchase. Tenants/ management company are not oblidged to withhold any tax on rent unless it's a foreign landlord.

However- if you do buy and sell/ use as an investment property within 5 years (changed to 2 in the last budget) stamp duty exemption will be clawed back and you will lose your first-time buyers relief. Revenue are going after this in a big way at the moment.

Look- Travel. Then come back and look at buying a house. Travel will be a big test of your relationship and you could break up and come home to a mortagage and a falling market- what then sherlock?

LegacyUser

Hello
I am in a similar situation and feel your pain in making a decision!
At the weekend me and my partner wrote down the pros and cons of both weather we should stay and buy or go travelling for a year..
We are both a little younger we are in our 24/25 but our main concern is leaving really well paid jobs and spending our deposit for our house we ave been dreaming about and saving for, for years.. we currently spend 1300 on a one bed apartment and feel this money could be better spent on a mortgage of the same price but we will have our own house in return with more space!
I have already done some travelling after college which was brilliant and an amazing experience, and I do have the urge to jet off again.. to which I know we would love and enjoy every minute but I am now having seconds thoughts, because it took my friend 5months to find a job when she came back from travel she works in a similar industrty , the thoughts of possibly spending 5months job hunting when getting home and then looking for somewhere to rent again to start saving all over again is kind of depressing to me, I understand she may have been unlucky but still I need to be prepared to wait along time for employment when we return home.
Realistically for us it would take about 3yrs to build up that sort of cash again for a deposit… thus delaying us getting married and starting a family etc…(im still young I know, but we both wan2 start a family youngish and we want to be finically stable before we do so..)
We still haven’t made up our minds on what we are going to do but just make sure u think about when you get back and be prepared on how long it will take u to get set up again.. writing things down made it clear to us where our properties lie, so try that to get things clear in your head.
You could always take a career break and head off for a couple of months after u’ve purchased your house to go travelling..

Best of luck with what you decide..

LegacyUser

monday07 wrote: »

Realistically for us it would take about 3yrs to build up that sort of cash again for a deposit… thus delaying us getting married and starting a family etc…(im still young I know, but we both wan2 start a family youngish and we want to be finically stable before we do so..)
We still haven’t made up our minds on what we are going to do but just make sure u think about when you get back and be prepared on how long it will take u to get set up again.. writing things down made it clear to us where our properties lie, so try that to get things clear in your head.
You could always take a career break and head off for a couple of months after u’ve purchased your house to go travelling..

Good point and definitely something to consider before you travel.
I would be inclined to say go travelling, you only live once but you have to take the above into account too.

Two friends of mine headed off for 18 months travelling with the idea that they'd buy a property when they came back to Ireland as they wanted to get married and have kids within the following couple of years.
Three years later they're both still renting and no closer to the home they want.

mikemac

SetantaL wrote: »

This is incorrect. Kindly post a link to the Accomodation forum where this was posted. CGT is only payable on the sale of a capital asset, not purchase. Tenants/ management company are not oblidged to withhold any tax on rent unless it's a foreign landlord.

However- if you do buy and sell/ use as an investment property within 5 years (changed to 2 in the last budget) stamp duty exemption will be clawed back and you will lose your first-time buyers relief. Revenue are going after this in a big way at the moment.

Apologies, I meant to say that if the OP buys the house as a FTB buyer and then rents it out entirely within 2 years, then CGT is due when it is sold.
I was kinda correct but you explained it better than me

And if the OP is abroad and getting rental income, then they are a foreign landlord imo

ztoical

micmclo wrote: »

And if the OP is abroad and getting rental income, then they are a foreign landlord imo

Not if they are just traveling, their official country of residency would still be Ireland.

irelandsown

I've spent the weekend doing the pros and cons thing too. However, my situation is different to the OP.

I a single 30 yr old male with my own house. Decided to go to Oz for a year in November. I need to apply for my working holiday visa b4 I turn 31 but thats no problem as it is valid for a year once I get it.

I know its risky to leave a good well paid job but I have never been outside Europe and am fed up hearing all my mates goin on about how good Australia and Asia are.

Big risk travelling on my own but I'm used to my own company and I'm sure I'll meet loads of ppl along the way. Another risk is not having a job when I get back but I'm confident that I'll get a job soon enough.

Has anyone ever used letting agents to take care of their house while travelling? Are they reliable?

JuliusCaesar

micmclo wrote: »

Apologies, I meant to say that if the OP buys the house as a FTB buyer and then rents it out entirely within 2 years, then CGT is due when it is sold.
I was kinda correct but you explained it better than me

And if the OP is abroad and getting rental income, then they are a foreign landlord imo

Brilliant Irish forum for any financial matters: http://www.askaboutmoney.com/

The_Conductor

First of all- house prices in the Dublin region fell on average 1,500 per month last year (an average of 17%) and higher in some areas outside the Pale. If you accept that purchasing at the moment is buying a depreciating asset- and look at the longer term picture- then fine- otherwise, stop and continue to save your money, or go travelling- its a far better proposition.

Re: buying and renting your property out- If you purchase property as a First Time Buyer and rent it out within the first two years, there is an instant clawback of the favourable stamp duty you availed of, and you are treated instead as an investor. The CGT issue referred to earlier in this thread, only comes into effect when you go to sell the property. The 2 year rule is actually a lot more lenient than it used to be- it was reduced from 5 years last January.

To be honest- it is difficult to advise someone to purchase in the current market. Prices are still far out of sync with fundamentals, and interest rates are still expected to increase by another 50 basis points (as indicated by Duisburg at last weeks pre-rate setting meeting this week, which is expected to leave rates on hold temporarily). So- interest rates are still going up, prices are falling, rental supply is increasing in most areas (with the possible exception of some parts of Cork)......

If I were you- I'd try to ensure I didn't spend all of my deposit, but would use the opportunity to go travelling- and then come back and settle down to the slog like the rest of us.....

Feel free to post over in Accommodation/Property if you have any queries, and our resident experts will advise accordingly.

LegacyUser

Hi thanks for all the replies, have just logged on. Monday07 thanks for the advice re weighing up all options and to be cautious re return. Best of luck with the decision ye make. (I'd go for it if I was ye given that ye're a bit younger!) I know some people on the thread are saying buy now and rent out but I don't think it can be as simple as that, having talked to people about whether renting out will properly cover mortgage and all other expenses. Maybe there are some success stories re this situation? Also, we are aware of the downturn in property market (and first time buyers) as noted by some posters, however not looking to buy this minute, would be a case of buying end of year or travelling at similar time. Need to sit down and really talk it out properly with boyfriend. Its funny, I was all on for travelling a few years ago but ended up going back to college and retraining. I'm really glad I did that but along the way kind of forgot about how much I wanted to travel. I'm leaning towards the travel option now but we'll wait and see. Thanks for all the opinions, advice etc.much appreciated. Irelands own, fair play for making the decision to head off alone, my brother doing it on his own right now, having a ball..best of luck to you.

ztoical

smccarrick wrote: »

Re: buying and renting your property out- If you purchase property as a First Time Buyer and rent it out within the first two years, there is an instant clawback of the favourable stamp duty you availed of, and you are treated instead as an investor. The CGT issue referred to earlier in this thread, only comes into effect when you go to sell the property. The 2 year rule is actually a lot more lenient than it used to be- it was reduced from 5 years last January.

.

Thanks for that info Smccarrick - I just bought a house as a first time buyer. I'm thinking of going back for my masters in 18 months, but the course I want is in London so I was going to rent the house out while I was away. Never would have thought of checking to see wither there was an issues with me renting it, shall make sure to look into it more.

chump

the people who agreed with buy now, rent for yr, go travelling advice

God Bless your utter ignorance

OP, go travelling. Plenty of time to burden yourself with 35years of debt.

ztoical

chump wrote: »

the people who agreed with buy now, rent for yr, go travelling advice

God Bless your utter ignorance

care to expand on that?

Mr. Incognito

Apologies, I meant to say that if the OP buys the house as a FTB buyer and then rents it out entirely within 2 years, then CGT is due when it is sold.
I was kinda correct but you explained it better than me

And if the OP is abroad and getting rental income, then they are a foreign landlord imo

You are getting a bit muddled here. Capital Gains tax is a tax based on the gain (if any) between the purchase price and the sale price of a capital asset. Regardless of whatever she does with the house if it increases in value between the date of purchase and sale CGT is due.

Whether you are abroad or not is immaterial to your residency status. She may still be resident under the 280 day look-back rule. With-holding tax on rental payments only applies to non-resident landlords.

Tax is a very specific thing so be careful and make sure you know the exact circumstances in your case.

Spades

Could somebody please explain this. "and interest rates are still expected to increase by another 50 basis points" ?

Is it half of 1% ?

Sorry for going off topic but i would like to know.

penexpers

SetantaL wrote: »

You are getting a bit muddled here. Capital Gains tax is a tax based on the gain (if any) between the purchase price and the sale price of a capital asset. Regardless of whatever she does with the house if it increases in value between the date of purchase and sale CGT is due.

Whether you are abroad or not is immaterial to your residency status. She may still be resident under the 280 day look-back rule. With-holding tax on rental payments only applies to non-resident landlords.

Tax is a very specific thing so be careful and make sure you know the exact circumstances in your case.

This is going wildly off topic, but CGT is not due if you sell your Principle Private Residence. If you buy a house and rent it out then it's not viewed as your PPR by Revenue, so when you sell it CGT will be due on the gain, subject to thresholds.

penexpers

And OP I would think very carefully about wheter to go away and travel. You more than likely will have trouble finding a job when you get back and if you have a job that you enjoy now then that's worth more than a year abroad, imo.

Mr. Incognito

And OP I would think very carefully about wheter to go away and travel. You more than likely will have trouble finding a job when you get back and if you have a job that you enjoy now then that's worth more than a year abroad, imo.

That's way too conservative for my tastes. It's just a job ffs. Travel will develop you much more as a person than any job. It's different if you're in a training contract but if you're qualified- go! Go now!

Also- forgot about PPR- Thanks for the correction.

Oryx

From someone who bought the house and never went anywhere.

Go. Travel. Before you tie the bricks and mortar noose around your neck.:)

penexpers

SetantaL wrote: »

That's way too conservative for my tastes. It's just a job ffs. Travel will develop you much more as a person than any job. It's different if you're in a training contract but if you're qualified- go! Go now!

It's not "just a job ffs". It's your career. It's something that the OP has probably worked long and hard for (given the ages mentioned). Interrupting it to go travelling could very well be akin to throwing all that away. I know people who have left really good decent jobs that they enjoyed to go travelling for a year and when they came back, they couldn't even get a job in Dunnes Stores. With the way the economy is turning to mush right now, there's an even better chance that jobs will be harder to find in 12 months.

BTW I'm not necessarily say "buy a house", that's an entirely different decision, but do think about how you would feel if you came back to Ireland and couldn't get a job.

The_Conductor

Spades wrote:

Could somebody please explain this. "and interest rates are still expected to increase by another 50 basis points" ?

Is it half of 1% ?

Sorry for going off topic but i would like to know.

Yes- 1/2 of 1%
Its not expected immediately- its expected as 2 rises of a quarter percent each, the first in March.

Mr. Incognito

It's not "just a job ffs". It's your career. It's something that the OP has probably worked long and hard for (given the ages mentioned). Interrupting it to go travelling could very well be akin to throwing all that away. I know people who have left really good decent jobs that they enjoyed to go travelling for a year and when they came back, they couldn't even get a job in Dunnes Stores. With the way the economy is turning to mush right now, there's an even better chance that jobs will be harder to find in 12 months.

BTW I'm not necessarily say "buy a house", that's an entirely different decision, but do think about how you would feel if you came back to Ireland and couldn't get a job.

Okay- I don't want to hijack the thread on this discussion but it's relevant to the question. A "Career" in your twenties is an illusion unless you're a professional sportsperson or a model or something. This is blatant scaremongering ****e. Who do you know who wasn't able to get a job? About 50% of my mates have gone and most have gotten BETTER jobs when they came back as employers know they have that out of their system and they won't be offing in two years. A job is to pay the bills. Memories are for life.

ztoical

SetantaL wrote: »

Okay- I don't want to hijack the thread on this discussion but it's relevant to the question. A "Career" in your twenties is an illusion unless you're a professional sportsperson or a model or something. This is blatant scaremongering ****e. Who do you know who wasn't able to get a job? About 50% of my mates have gone and most have gotten BETTER jobs when they came back as employers know they have that out of their system and they won't be offing in two years. A job is to pay the bills. Memories are for life.

well put - work to live not live to work. Traveling and seeing other cultures can be a huge bonus for some. I know it helped with my career as I work with lots of different nationalities and its great being able to relate to them better.

paul_ire57

Hi

I think you would be best advised travelling first and then buying. They say that travelling around with your partner is a great way of identifying if you are meant to be together long term.

Finally it sounds like you have a nice job that you are happy in. A lot of employers wouldnt like to lose a good employee who is happy in the job and they then have to go about finding a replacement who will take 3-6 months to settle in and then may not be as good as you at the job or may not like the job and subsequently leave and cause the employer more hassle.

How about suggesting that you want to travel for maybe 3 -4 months instead of a year, and that you keep your job so you have something that you are happy to return to. At least when you get back you have a solid base to return to and can get to work quickly on building back up the savings that you used on your traveling.

Good luck with your decision

Paul

elambra

ztoical wrote: »

well put - work to live not live to work. Traveling and seeing other cultures can be a huge bonus for some. I know it helped with my career as I work with lots of different nationalities and its great being able to relate to them better.

haha I was just about to say that: work to live not live to work.. do it, feck the career of course you'll get a job when you come back... that's what I'm planning to do in May - give up the job after 3.5 years and see more of the world, there's no way I'd conciously succumb to the drone of a lifetime debt if I had the opportunity to travel first (and I do :-) )