Moving abroad - should I rent or sell my apartment

DMG1983

Hey,
I recently bought a 2 bed apartment in the Gasworks. I am moving abroad in June and I don't know whether I should keep the property and rent it out- the rent will easily cover the mortgage or sell it. I got it at a good price and have done quite a bit of work including replacing the kitchen and all the floors so if I sell it I will probably make a small profit.
If I sell the apartment now I won't have to pay capital gains tax but if I rent it and sell it in a few years I will.
Does anyone have any experience with a similiar situation or general advice, I am changing my mind every 5 minutes?!

D3PO

DMG1983 wrote: »

Hey,
I recently bought a 2 bed apartment in the Gasworks. I am moving abroad in June and I don't know whether I should keep the property and rent it out- the rent will easily cover the mortgage or sell it. I got it at a good price and have done quite a bit of work including replacing the kitchen and all the floors so if I sell it I will probably make a small profit.
If I sell the apartment now I won't have to pay capital gains tax but if I rent it and sell it in a few years I will.
Does anyone have any experience with a similiar situation or general advice, I am changing my mind every 5 minutes?!

Why the hell does everybody come on here with this mentality. You have to pay tax on the income, just because mortgage = X and Rent = greater than X doesn't mean you "easily cover the mortgage"

you have tax to pay, property tax, maintenance, EA management fee will set you back most likely over 10% of the rental income too.

re do your maths. I can assure you that you wont easily cover your mortgage. If your going to rent do it right and do it professionally, we have far too many amateur landlords as it is.

djimi

How long do you plan on moving abroad for, and do you want to have the property available to you when (if) you return?

My advice is if you are going abroad long term then you need to ask yourself if you actually want to be a landlord, and deal with the hassle and possible cost involved in keeping and managing a property? Especially from abroad where its going to be more hassle to deal with any issues that might arise.

djimi

D3PO wrote: »

I can assure you that you wont easily cover your mortgage.

If the Gasworks is the one that Im thinking of then the outrageous rents being charged there at the moment could well cover the mortgage and then some :eek:

DMG1983

Thanks for the replies,
I am not sure how long I will be abroad, at least 3 years anyway.
I would be using a property management company and I did do my maths D3PO the rent will easily cover the mortgage, the fees, the insurance and all other associated costs involved so there is no need to be so condescending.
I wanted to know if anyone in a similiar situation had any reservations because of their experience dealing with these things abroad.

Oral Surgeon

DMG1983 wrote: »

Thanks for the replies,
I am not sure how long I will be abroad, at least 3 years anyway.
I would be using a property management company and I did do my maths D3PO the rent will easily cover the mortgage, the fees, the insurance and all other associated costs involved so there is no need to be so condescending.
I wanted to know if anyone in a similiar situation had any reservations because of their experience dealing with these things abroad.

Tax??

DMG1983

Oral Surgeon wrote: »

Tax??

I am exempt from property tax as a first time buyer, I realise I will have to pay tax on the profit made from the rent received minus my mortgage repayments. I won't be making any profit once all the additional costs are all paid and I have factored in wear and tear also.
It's not really about making a profit from the rent or sale it's more about having a place at home that I know will be there if I want to come back but not if it's going to be a lot of hassle (if that makes sense!!)
I will be getting a property manager if I decide to rent but I imagine that there will still be a requirement for some level of input from me!

dori_dormer

I was in a similar situation to yourself a few years ago. We moved abroad for 1 year, which turned into 2 and a half. We rented out our apartment during that time. To be honest, I would say try and sell before you go.
It really is a huge hassle to be a landlord, let alone one abroad. Now we had to supplement our mortgage as rental didnt cover that let alone the added expenses, but apart from that the main thing was Revenue.

If you are not considered a resident in the country, you have to pay 20% tax on your income. There are no deductions allowed for like 12.5% of furniture costs over 8 years etc, fees or anything else to reduce this amount. Its 20% of the rent alone that you receive.

There are rules about being considered a resident on citizensinformation.ie for a particular year. It mainly relates to how many days you are in Ireland that year, previous year, following year.

We are hoping to sell our apartment now because the chances of us being sent abroad again are high and we dont want to get stuck with a huge tax bill again.

So other than the obvious issues that becoming a landlord will have, ask someone about the tax implications specific to you and the length of time youll be away.

Oral Surgeon

DMG1983 wrote: »

I am exempt from property tax as a first time buyer, I realise I will have to pay tax on the profit made from the rent received minus my mortgage repayments. I won't be making any profit once all the additional costs are all paid and I have factored in wear and tear also.
It's not really about making a profit from the rent or sale it's more about having a place at home that I know will be there if I want to come back but not if it's going to be a lot of hassle (if that makes sense!!)
I will be getting a property manager if I decide to rent but I imagine that there will still be a requirement for some level of input from me!

No, your mortgage is not a tax deductible expense, you can't factor it into the calculation!!

DMG1983

Oral Surgeon wrote: »

No, your mortgage is not a tax deductible expense, you can't factor it into the calculation!!

Oh ok thanks for that- I think I should still be ok but given what dori_dormer has said (and a few others I've spoke to) most would advise on selling before I go. I suppose it was a safety net keeping it but realistically I don't know if I'll ever be moving back! Cheers for the replies guys!!

3DataModem

DMG1983 wrote: »

I realise I will have to pay tax on the profit made from the rent received minus my mortgage repayments.

Nope. Tax on rent minus 75% of the interest element of your mortgage. How long left on your mortgage, and what is the interest rate?

TheBandicoot

DMG1983 wrote: »

it's more about having a place at home that I know will be there if I want to come back but not if it's going to be a lot of hassle !

Well bear in mind it might not be there for you- it could be tied up in the middle of a year-long lease when you return and you will have to wait for that to end.

3DataModem

TheBandicoot wrote: »

Well bear in mind it might not be there for you- it could be tied up in the middle of a year-long lease when you return and you will have to wait for that to end.

Best let the least roll over into a Part 4, then you can boot them out (with notice) when you want to return.

TheBandicoot

3DataModem wrote: »

Best let the least roll over into a Part 4, then you can boot them out (with notice) when you want to return.

True, just saying it's possible you never get a tenant who wants to stay on longer than a year, so you only have fixed-term leases, it happens.

DMG1983

3DataModem wrote: »

Nope. Tax on rent minus 75% of the interest element of your mortgage. How long left on your mortgage, and what is the interest rate?

I'm going to talk to a tax consultant before I decide what to do so I'm clear on all aspects- thanks for the reply!

DMG1983

TheBandicoot wrote: »

True, just saying it's possible you never get a tenant who wants to stay on longer than a year, so you only have fixed-term leases, it happens.

Good point thebandicoot I hadn't considered that!

Grandpa Hassan

I was in the same position OP. But I've kept mine. It's part of my retirement....either throwing off an income by the time I'm 55, or else an unencumbered asset. No way I can get in the property ladder in London without family money, and I wouldn't have the discipline to invest. So the cost....the odd month without rent, the occasional refurbs, property tax etc....are effectively part of my investment for the future. Worth considering as part of your decision

Mrs OBumble

I have an apartment like that (in another country while I live here).

With a professional property manager in place, being a landlord is no hassle at all. (FWIW, I pay 11% of rent to them, but it's well worth it for the level of service they provide - and this is tax-deductable.) Make sure you get one that specialises in rental property manageement, not an EA who does rentals on the side.

How much tax you owe will depend on your taxable income: I'm paying a lot (soon to be 52% once PRSI applies to non-earned income, less the amount of tax I pay on it at home). But it's not only about money, it's also about retirement strategy, cashflow, connection with home, having an income stream there (which also covers the cost of my PO Box there and my storage unit). And the sheer amount that I would lose in CGT if I sold there

And as for the comment that it may not be available to you when you come home ... welll doh! Of course I will be planning my eventual return home to fit around lease-expiry dates if the plan it to move into it!

If you sold now, would you make on the deal even after the stamp duty and the sale and purchase costs (laywers etc). If not, then I'd say hold on to it - subject to proper tax advice of course.

DMG1983

Mrs OBumble wrote: »

I have an apartment like that (in another country while I live here).

With a professional property manager in place, being a landlord is no hassle at all. (FWIW, I pay 11% of rent to them, but it's well worth it for the level of service they provide - and this is tax-deductable.) Make sure you get one that specialises in rental property manageement, not an EA who does rentals on the side.

How much tax you owe will depend on your taxable income: I'm paying a lot (soon to be 52% once PRSI applies to non-earned income, less the amount of tax I pay on it at home). But it's not only about money, it's also about retirement strategy, cashflow, connection with home, having an income stream there (which also covers the cost of my PO Box there and my storage unit). And the sheer amount that I would lose in CGT if I sold there

And as for the comment that it may not be available to you when you come home ... welll doh! Of course I will be planning my eventual return home to fit around lease-expiry dates if the plan it to move into it!

If you sold now, would you make on the deal even after the stamp duty and the sale and purchase costs (laywers etc). If not, then I'd say hold on to it - subject to proper tax advice of course.

Thank you for the advice, I will spend some time weighing the pros and cons and consult with a tax expert so I don't get any nice surprises down the line!!
I appreciate your help!

Victor

D3PO wrote: »

Why the hell does everybody come on here with this mentality.

No need to be quite so forthright.

Moderator

Grandpa Hassan

Mrs OBumble wrote: »

I have an apartment like that (in another country while I live here).

With a professional property manager in place, being a landlord is no hassle at all. (FWIW, I pay 11% of rent to them, but it's well worth it for the level of service they provide - and this is tax-deductable.) Make sure you get one that specialises in rental property manageement, not an EA who does rentals on the side.

How much tax you owe will depend on your taxable income: I'm paying a lot (soon to be 52% once PRSI applies to non-earned income, less the amount of tax I pay on it at home). But it's not only about money, it's also about retirement strategy, cashflow, connection with home, having an income stream there (which also covers the cost of my PO Box there and my storage unit). And the sheer amount that I would lose in CGT if I sold there

This is the one aspect of it in Ireland which is pretty easy, OP. Flat 20% for overseas LLs, irrespective of the marginal tax rate you pay in the country that you live. That is not as big a hit as it might otherwise be, and makes being an overseas LL perfectly manageable

Mrs OBumble

But remember that when you become tax-resident in another country, you have to consider what tax they might charge you on overseas (ie Irish) income, too.

SuperS54

Isn't it the tenants responsibility to ensure the 20% tax is paid in the event of the landlord living overseas?

D3PO

DMG1983 wrote: »

I I realise I will have to pay tax on the profit made from the rent received minus my mortgage repayments.
!

you don't realize anything., Your mortgage repayments aren't deductible only 75% of interest is. God almighty.

D3PO

DMG1983 wrote: »

D3PO the rent will easily cover the mortgage, the fees, the insurance and all other associated costs involved so there is no need to be so condescending.
.

there is a reason to be condescending. You have shown in the thread you have no idea what you are talking about. You don't even know what tax deductible but think you can "cover your mortgage"

before you go thinking about your options you should learn all about being a landlord because as it stands its fair to say you would be nothing more than an amateur.

Dr Turk Turkelton

D3PO wrote: »

you don't realize anything., Your mortgage repayments aren't deductible only 75% of interest is. God almighty. :rolleyes::rolleyes:

This has already being stated and the op has acknowledged it.
Perhaps read the thread before commenting in future?and rolling your eyes.

Grandpa Hassan

SuperS54 wrote: »

Isn't it the tenants responsibility to ensure the 20% tax is paid in the event of the landlord living overseas?

Theoretically. But I would like to see the authorities claim backdated payments or try to take a tenant to court for not doing this. There would be uproar. It is completely unworkable

SuperS54

My feelings are the same, it seems completely unworkable ~ the tenant could simply state that they were unaware the LL was non-resident for tax purposes. It also doesn't seem particularly fair that this is the tenants responsibility anyway...

Dori_dormer ~ if you don't mind, can you supply some more details on how you were hit with a tax bill?" Particularly in relation to the fact that it is apparently the tenants responsibility to deduct the 20% and submit it to revenue.

djimi

Grandpa Hassan wrote: »

Theoretically. But I would like to see the authorities claim backdated payments or try to take a tenant to court for not doing this. There would be uproar. It is completely unworkable

It also only applies where rent is paid directly to the landlord. The OP is talking about using a letting agent to manage the tenancy, so the 20% deduction from the rent would not apply, assuming the tenant pays rent to the agent rather than the landlord.

djimi

D3PO wrote: »

there is a reason to be condescending. You have shown in the thread you have no idea what you are talking about. You don't even know what tax deductible but think you can "cover your mortgage"

In fairness rents in the Gasworks currently range upwards of €2200-€2500 a month. We have no idea how much of a mortgage the OP has, so whether or not the rent (even taking tax and deductions into account) will cover the mortgage is not really something that we are in a position to speculate about. Its entirely possible that a rent that high will cover any costs.

Scortho

djimi wrote: »

In fairness rents in the Gasworks currently range upwards of €2200-€2500 a month. We have no idea how much of a mortgage the OP has, so whether or not the rent (even taking tax and deductions into account) will cover the mortgage is not really something that we are in a position to speculate about. Its entirely possible that a rent that high will cover any costs.

It is plausible, but you can't deny the fact that d3po is right that the op hasn't a clue about being a landlord.
There's a lot more fees to be met than just the mortgage payment.

Best thing for the op to do is to do a spreadsheet of rent vs total costs and post her up so we can pick holes in it.

While I'd keep it (mainly because even if the rent didn't cover the mortgage, it's a good way of providing for your pension if you don't find pension plans attractive.)
I know I'd choose an apartment that covers most of the rent than paying into a pension that might be worth feck all in 40 years time.
At least the apartment would continue to pay a good rent as there'll always be demand for city centre.

However I wouldn't be looking at it as rent is x, mortgage is less than x therefore profit.

djimi

Scortho wrote: »

It is plausible, but you can't deny the fact that d3po is right that the op hasn't a clue about being a landlord.
There's a lot more fees to be met than just the mortgage payment.

Dont get me wrong, Im not disagreeing that the OP hasnt a clue. But the point still stands that we have no idea how much the mortgage is on the place; for all we know the OP might have had 75% cash deposit and is paying €400 a month to the mortgage, meaning they dont have to do the math to know that a rent of €2200+ is going to cover it.

Santa Cruz

If you sell now you are selling in a market that is just starting to rise. There will be no need for any significant input from you once you have a proper management company looking after the property. Thousands of people live overseas and have properties rented out without any hassle

Santa Cruz

djimi wrote: »

If the Gasworks is the one that Im thinking of then the outrageous rents being charged there at the moment could well cover the mortgage and then some :eek:

The "outrageous" rents are there because of the laws of supply and demand.
People want to live close to the city and their place of employment and are willing to pay for the privilege. Others prefer to live out in the sticks at what they think are cheaper costs. They don't factor in the costs of transport, time loss etc.

djimi

Santa Cruz wrote: »

The "outrageous" rents are there because of the laws of supply and demand.
People want to live close to the city and their place of employment and are willing to pay for the privilege. Others prefer to live out in the sticks at what they think are cheaper costs. They don't factor in the costs of transport, time loss etc.

I understand that. Still doesnt change the fact that something that costs as much per week pretty much as I pay per month is pretty outrageous, to me anyway :P

Im not knocking them; they look like nice apartments and if people want to pay that much to live there (and can afford it) then more power to them.

handlemaster

I think the LL issues can be over egged by some. Sure there can be problems but with a good letting agent managing the apt there shouldnt be much hassle. To use that over used phrase 'at the end of the day' if your getting hassle sell it then. The location is great you shouldn't have much problem letting. Best of luck

DMG1983

D3PO wrote: »

you don't realize anything., Your mortgage repayments aren't deductible only 75% of interest is. God almighty.

Why do you bother to reply to a post if it is only to be nasty? I thought a forum was a place you could come to seek advice- if you don't have any to give then please don't waste your time in responding. I never claimed to be an expert in being a landlord or a tax specialist and I find it hard to understand why you are acting so indignant that I should dare ask a question.
Thank you to everyone who has responded with actual advice on this matter, I appreciate your help.

D3PO

the point is you weren't asking the question. you came on with this cock and bull notion rent = more than mortgage therefore everything is covered financially.

a smidge only a smidge of actually doing any research would have made you realize that's not how it works. I am indignant of you and ever other person who goes or thinks of going into becoming a LL in a half assed way.

DMG1983

D3PO wrote: »

the point is you weren't asking the question. you came on with this cock and bull notion rent = more than mortgage therefore everything is covered financially.

a smidge only a smidge of actually doing any research would have made you realize that's not how it works. I am indignant of you and ever other person who goes or thinks of going into becoming a LL in a half assed way.

Actually I was asking a question- I made a statement regarding my mortgage being covered by my rent- which it will be and I still stand by that even though people have highlighted things which I was unaware of.
As I stated numerous times I will be getting a pm company to manage the rental so I will not be a half assed landlord.
What has the mortgage being covered by the rent got to do with my ability to be a ll anyway- if it wasn't covered I would make up the difference myself and be responsible for any other bills.
I am sorry if you have had a bad experience with a landlord in the past but there is no need to be so rude and judgemental.

relax carry on

While I don't exactly agree with D3POs way of highlighting the OPs misunderstanding of the taxation side of being a landlord, he does raise the point the continues to get many amateur or reluctant landlords in trouble with Revenue.

The general line is "my rental income doesn't cover my mortgage, so no tax is due. If no tax is due then no tax return is due". This is then usually exacerbated by a failure to cancel TRS and a failure to register the tenancy(s) with the PRTB.

The bottom line is anyone renting out any properties would be wise to speak to a good tax advisor as part of their preparations to rent.

DMG1983

The bottom line is anyone renting out any properties would be wise to speak to a good tax advisor as part of their preparations to rent.[/QUOTE]

Thank you for the reply, I have an appointment to speak to a tax consultant next week so I will be in a better position to make a decision then.

Lantus

Can't see it mentioned but you will also have to register with the Private residential Tenancy Board as a landlord.

As well as revenue issues and the EA you will need to make sure you have landlords insurance and notify your mortgage provider which may affect your mortgage. The management company will need to be notified and of course your management fees need to be factored in.

Renting will create wear and tear on your property. The nice kitchen you put in may need to be replaced or repaired and the property cleaned ready for the next tenant. You may have a gap of one or two months between tenants and the mortgage will need to be covered. New tenants means re-registration with the PRTB. A good EA will do a lot of this for a price.

Most of us have seen the post regarding the tenant whose boiler failed and the landlord just shrugged his shoulders as he had no money. I'm guessing your apartment is all electric but things can still go wrong.

Its not a tale of woe but you need to make some good financial allowances for these things. Rental yields like all things work out best over a long period of time. I don't know anyone who had to move away and made any money on their property, most were just glad they didn't lose too much!

Grandpa Hassan

Lantus wrote: »

I don't know anyone who had to move away and made any money on their property, most were just glad they didn't lose too much!

In the short term, yes. But you end up with an unencumbered asset which you can either sell in your retirement or take the rental income to supplement your retirement income. I view all the associated costs as an investment.

If you're not prepared to play the long game, then being a LL is daft. But it forms a perfectly sound piece of retirement planning