Buying a second House

Mightymouse vs Dangermouse

Hi all.
Im thinking of buying a second property, fixer upper or 1 thats habitable and can tip away at it, maybe rent it out summer months or something.
Basically to let it sit for a few years , have it fixed up and sell it on, say 5 to ten years.
If you own a second property, what taxes do you pay?
My friend said you have to declare it as a holiday home or rental, but what if you never rented it, just had it??
Iknow you have property tax, water, what else?
Are there drawbacks to owning a second house.
Any help appreciated

adam88

Mightymouse vs Dangermouse wrote: »

Hi all.
Im thinking of buying a second property, fixer upper or 1 thats habitable and can tip away at it, maybe rent it out summer months or something.
Basically to let it sit for a few years , have it fixed up and sell it on, say 5 to ten years.
If you own a second property, what taxes do you pay?
My friend said you have to declare it as a holiday home or rental, but what if you never rented it, just had it??
Iknow you have property tax, water, what else?
Are there drawbacks to owning a second house.
Any help appreciated

May I ask are you getting a mortgage to buy it or are you a cash buyer

Mightymouse vs Dangermouse

Depending on price, but im hoping cash, .
im in a good rental area so it wouldnt be a proplem to rent it for 3 or 4 months of the summer to cover basic costs

athtrasna

Insurance is going to be a big issue for a long term unoccupied property

The_Conductor

Mightymouse vs Dangermouse wrote: »

Depending on price, but im hoping cash, .
im in a good rental area so it wouldnt be a proplem to rent it for 3 or 4 months of the summer to cover basic costs

Basic costs?
Such as property tax, water/gas/electricity connections and standing charges, PRTB registration fees for each tenancy, etc etc etc. Remember too- any income generated is taxable income (less allowable deductions- however the biggest allowable deduction for landlords is mortgage interest (@ 75%)- which as a cash buyer you're not going to qualify for).
You're now going to pay PRSI etc on the gross rental income too- another wonderful new idea from the government.

You could have a tenant playing the system- who refuses to give you rent- and it could take well over a year to legally evict them- during which time you don't have use of the asset- and they may well thrash it too. If you try to remove them- its a mad cash payout for them in court- despite the fact that they haven't paid you rent........

You really need to sit down and research what being a landlord entails- and what your rights and obligations towards a tenant are (and what their rights and obligations towards you are).

Becoming a landlord- is not for the faint hearted.

padjo5

Might be a good idea to calculate and do a list for yourself of all the monthly and yearly expenses you will have in relation to the property: as above PRTB, water&home charges, utility standing charges, Home insurance (try get a quote now), utilities, mortgage interest&repayment (if applicable), so as to give yourself as close a reflection of reality as possible.

What percentage increase on the capital value are you expecting over the 5-10 years? Can you share what general part of the country you are looking to buy?
P

Mightymouse vs Dangermouse

Yes, im in cork city.
Im hoping to buy in cash , hoping to get something between 70 and 90 k.
my plan is to fix it up, rent out a room or 2 in my own place and stay in the "new one" while fixing it up over the next 2 or 3 years.

murphaph

The_Conductor wrote: »

You're now going to pay PRSI etc on the gross rental income too- another wonderful new idea from the government.

to clarify, PRSI was always due on rental income. it was just that employees under the PAYE system were exempt from it. that exemption is what's being abolished. Self employed always had to pay PRSI on rental income.

D3PO

OP what are the figures for your plan ?

How much do you expect to pay for this property ?
How much will property tax cost you for the period you hope to hold onto the property ?
How much will the repair work cost you ?
How much will you spend in house insurance ?
Solicitors fees ?
If mortgaged how much will you spend on interest ?

How much do you expect to sell the property for at the end of the 5-10 year plan you have ?

How much profit will that leave you after you pay a second set of solicitors fees, EA fees, and capital gains tax ?


The devil is in the detail. To me I cant see how the return on investment can be in anyway good enough to even contemplate this.

Its hard enough to get a good ROI when renting out a second property not to mind getting a good one when all your doing in a long term flip !!!

Moonbeam

I rent out my previous home and it sucks unless you are completely loaded and able to cover every and any extra that does go wrong.
Saying that I would love to buy a little fixer upper holiday home out right and do it up over the years and rent it out for a few months a year to help it cover costs.
It would not cost you a fortune and one of the worst parts of being a landlord is dealing with tenants.
Insurance will be high,property tax will be low enough based on a value of 70-80k but of course if you increase the house value that increases too.

Mightymouse vs Dangermouse

moonbeam, why would insurance be so high?

The_Conductor

Mightymouse vs Dangermouse wrote: »

moonbeam, why would insurance be so high?

If the house isn't occupied full time- insurance is always significantly higher- breakins could take longer to respond to- or if there was a burst pipe or whatever- it could be hours or even days before its noticed and dealt with. Not having someone there full time- means if something does happen- it tends not to be noticed as quickly- and a little problem that might have been very easily resolved, can turn into a much bigger mess.

Mightymouse vs Dangermouse

ok, makes sense. thank you.

Pawwed Rig

Mightymouse vs Dangermouse wrote: »

ok, makes sense. thank you.

You will also see in your own house insurance a clause about the property being empty. If you, for example, went on hols for two months you could find your insurance voided should they become aware the house was empty for that period.

Mrs OBumble

Pawwed Rig wrote: »

You will also see in your own house insurance a clause about the property being empty. If you, for example, went on hols for two months you could find your insurance voided should they become aware the house was empty for that period.

Indeed. I believe the standard is that you need to tell the insurance company if the property will be empty for more than 30 days.

Most rental leases also have a clause which says that tenants have to tell their landlord if they're away for more than 30 days, for just the same reason.