Too soon to invest in building?

B-D-P--

Hi all,
Currently in the middle of building a house with the missus,
However, we also seen a ok 2 bedroom apartment up for sale in mayo for €45000. It looks to be in good knick, may need a few grand to make it letable but overall not bad.

Average rent in area is €600, maybe not as much for a 2 bed apartment but easily €500pm.

Is the market still to unstable to be even considering this or whats peoples opinion?

BrokenArrows

B-D-P-- wrote: »

Hi all,
Currently in the middle of building a house with the missus,
However, we also seen a ok 1 bedroom apartment up for sale in mayo for €45000. It looks to be in good knick, may need a few grand to make it letable but overall not bad.

Average rent in area is €600, maybe not as much for a 2 bed apartment but easily €500pm.

Is the market still to unstable to be even considering this or whats peoples opinion?

Assuming you plan on mortgaging the new house can you afford the repayments if you cannot find a tenant or the rental prices plummet?

B-D-P--

Yea, I wouldn't imagine the repayments being awful hefty.
€50000 over 7 years is 600pm, will split this 50 - 50 with my income and the missus.

Added in 5k for interest

Avatar MIA

Where's the location of the 1 bed... It's not going to be the location per your Avatar

Don't forget the after tax position of the rent, so wont cover the actual mortgage. Not, that that's a deal breaker of course.

B-D-P--

Avatar MIA wrote: »

Where's the location of the 1 bed... It's not going to be the location per your Avatar

Don't forget the after tax position of the rent, so wont cover the actual mortgage. Not, that that's a deal breaker of course.

No no in the west in the home town where I plan to move back

Yea so is there some documentation to help there
Lets say I'm on 35k a year, herself on similiar
We do buy this and rent for 600pm, is there any documents to help me calculate how much of that will be taxed also?

B-D-P--

Also I meant to say its a 2 bed apartment, Changed original post.

Avatar MIA

B-D-P-- wrote: »

No no in the west in the home town where I plan to move back

Yea so is there some documentation to help there
Lets say I'm on 35k a year, herself on similiar
We do buy this and rent for 600pm, is there any documents to help me calculate how much of that will be taxed also?

Are you married?

B-D-P--

Avatar MIA wrote: »

Are you married?

No, but dont see that too far off the horizon.
But shhh dont tell herself (Shes not on boards so we are ok )

pocketse

Mortgage is €600pm thats €7200
If you rent for €500pm thats €6000 per year.

You'll also have property tax and fix up costs.

Cant tell you what your exact tax will be, that depends on your own circumstances.

If you take in €6000, then subtract expenses,
75% of mortgage interest - €4500/75%= €3375 (estimate)
Other expenses - furniture, ptrb, upkeep,insurance. They'll be big the first year but at a rough estimate lets say €500 per year on a regular year.

€6000 - (3375 + 500) = € 2125 is what you will be liable to pay tax on

Plus €1200 you will have to make up in the shortfall in the mortgage and rent.

These figures are rough as a badgers arse, but just to give you a rough idea.

B-D-P--

pocketse wrote: »

Mortgage is €600pm thats €7200
If you rent for €500pm thats €6000 per year.

You'll also have property tax and fix up costs.

Cant tell you what your exact tax will be, that depends on your own circumstances.

If you take in €6000, then subtract expenses,
75% of mortgage interest - €4500/75%= €3375 (estimate)
Other expenses - furniture, ptrb, upkeep,insurance. They'll be big the first year but at a rough estimate lets say €500 per year on a regular year.

€6000 - (3375 + 500) = € 2125 is what you will be liable to pay tax on

Plus €1200 you will have to make up in the shortfall in the mortgage and rent.

These figures are rough as a badgers arse, but just to give you a rough idea.

Badgers arse figures are what I'm looking for
Thanks

Avatar MIA

Oh, FFS - I'd a long response made out and calculations, but boards asked me for a Capatcha and it got lost. Not going to write it out again, but taking 75% allowable interest relief, and assuming you took out a personal loan over 7 years instead of a mortgage with €9k interest.

Average annual income would be €4,100 after tax with monthly repayments of approx. €643.

B-D-P--

Avatar MIA wrote: »

Oh, FFS - I'd a long response made out and calculations, but boards asked me for a Capatcha and it got lost. Not going to write it out again, but taking 75% allowable interest relief, and assuming you took out a personal loan over 7 years instead of a mortgage with €9k interest.

Average annual income would be €4,100 after tax with monthly repayments of approx. €643.

So on a rough estimate
we'd be paying 300 pm extra from our pocket untill the mortgage paid off?
I Know this is the stuff we should be talking to accountant about, but we just considering if its a good idea before approaching an accountant.

Thanks for help guys.

Avatar MIA

B-D-P-- wrote: »

So on a rough estimate
we'd be paying 300 pm extra from our pocket untill the mortgage paid off?
I Know this is the stuff we should be talking to accountant about, but we just considering if its a good idea before approaching an accountant.

Thanks for help guys.

On average, over 7 years - that'd be my calculation.

Because of interest relief, the cashflows will be lower at the start of the 7 year term. Bear in mind, in cashflow terms you'd be getting €600 per month rent and paying out €643 loan repayment, then you'd have to pay out a lump sum to revenue when the tax fell due. You'd have to fill out a Form 11.