Selling and buying for dummies

misc2013

Clueless about all this and seeking some basic pointers.

I own a house that's rented out long-term. I'm an accidental landlord. Had to relocate for work reasons and have been renting in another county ever since.

The opportunity to buy the rented property has come up. I'm now married with kids and we'd love to own our existing home and be able to put our stamp on it as well as have the security of same. Two mortgages is not an option so I'm thinking of selling my home which is rented out.

There is about 100K left on the mortgage. I think it might sell for 200K but after capital gains I'd do well to have ? 60K ?

Anyway...
Questions:
How much notice do my tenants need? They are there 7 yrs.
Would it be an advantage if my husband bought house in his name only as he'd qualify as a first time buyer. I wouldn't. Yet, if he did that, would he still he assessed on our joint income?

Or would we be better applying as a couple using my house as collateral, if that's even the word? Or would we be better to sell mine first?

We'd love to extend our rented home down the line but from previous posts, this would be waaay down the line.

Can't think of anything else this second but no doubt havevorher questions....

standardg60

Open to correction on this but as far as I know..

Put the house on the market (in which case the tenants are obliged to vacate within the standard 30 days) at an unrealistically high price.
Leave the house vacant for six months in which case it returns to being your principle and private residence not subject to cgt.
Reduce the price to a realistic level.

Samuel T. Cogley

You sell the first place and use the cash as the deposit for the second place. Have you secured financing for the new place?

Samuel T. Cogley

standardg60 wrote: »

Open to correction on this but as far as I know..

Put the house on the market (in which case the tenants are obliged to vacate within the standard 30 days) at an unrealistically high price.
Leave the house vacant for six months in which case it returns to being your principle and private residence not subject to cgt.
Reduce the price to a realistic level.

Yeah that needs correction. The tenants need 196 days notice and a PPR needs to be the primary residence where you're expected to be found.

dudara

If your tenants have been there for over 7 years but less than 8, then they are due 28 weeks notice. This notice of termination will also need to be accompanied by a statutory declaration stating that you are selling then house. If you go this path, make sure to do it 100% by the book.

Caranica

standardg60 wrote: »

Open to correction on this but as far as I know..

Put the house on the market (in which case the tenants are obliged to vacate within the standard 30 days) at an unrealistically high price.
Leave the house vacant for six months in which case it returns to being your principle and private residence not subject to cgt.
Reduce the price to a realistic level.

100% wrong.

Even with selling you have to give the minimum notice set out in the RTA which is based on length of tenancy.

CGT is calculated based on the time the home was rented out of the time the home was owned. The clock does not reset after 6 months.

standardg60

Happy to be corrected. Clearly the renting of a house differs from operating a business from one.

So now the op knows the tenants require six months notice regardless.

And that the cgt is a percentage of how long the house was a ppr versus how long it was rented?

misc2013

Caranica wrote: »

100% wrong.


CGT is calculated based on the time the home was rented out of the time the home was owned. The clock does not reset after 6 months.

How do you mean? Is it a different tax based on how long I let out the property? I was just assuming a flat rate of 30% but knowing my luck, I'm at the top rate anyway. I lived in it for 7 yrs and have let it for 7. How does that look for CGT?

hawkelady

Do not buy the new house in your partners name ffs !! If things turn sour are you happy for him to have the house outright and for you to be turfed out on your ear with nothing to show. Talk to a solicitor btw as they will advise you

misc2013

standardg60 wrote: »

Open to correction on this but as far as I know..

Leave the house vacant for six months in which case it returns to being your principle and private residence not subject to cgt.
.

I can't see how this would work. I didn't even think to hold a room the last no. of years cos I live too far away. I don't think I could swing it being my principle residence when it's not commutable for work. Or am I being too naive? Is this what people do/ a realistic loophole? Could it be argued I stay there at weekends? In fairness, it is not totally unrealistic for circumstances to take me back there and thus need to stay at the weekends or part of the week.....I just never considered that option...

misc2013

hawkelady wrote: »

Do not buy the new house in your partners name ffs !! If things turn sour are you happy for him to have the house outright and for you to be turfed out on your ear with nothing to show. Talk to a solicitor btw as they will advise you

Fair enough. Horrible idea given recently married but guess you're right...

Graham

misc2013 wrote: »

I can't see how this would work. I didn't even think to hold a room the last no. of years cos I live too far away. I don't think I could swing it being my principle residence when it's not commutable for work. Or am I being too naive? Is this what people do/ a realistic loophole? Could it be argued I stay there at weekends? In fairness, it is not totally unrealistic for circumstances to take me back there and thus need to stay at the weekends or part of the week.....I just never considered that option...

There is nothing you can do to retrospectively change the previous non-ppr status of the property.

misc2013

Graham wrote: »

There is nothing you can do to retrospectively change the previous non-ppr status of the property.

Grand. No point annoying myself about that possible strategy so....

Graham

misc2013 wrote: »

How do you mean? Is it a different tax based on how long I let out the property? I was just assuming a flat rate of 30% but knowing my luck, I'm at the top rate anyway. I lived in it for 7 yrs and have let it for 7. How does that look for CGT?

My understanding is; your ownership is 50% PPR, 50% non-PPR. As such you pay CGT on 50% of the increase in value.

Take professional advice though, it could be an expensive mistake if you get it wrong. Certainly don't take the word of some random off the internet (i.e. me)!

See Page 34 of this revenue guide: CGT1 - Guide to Capital Gains Tax

misc2013

Samuel T. Cogley wrote: »

You sell the first place and use the cash as the deposit for the second place. Have you secured financing for the new place?

Nah...the idea is only new. Is having a house already an advantage or disadvantage? Does it depend on the amount of loan left or loan to current value?

misc2013

Graham wrote: »

My understanding is; your ownership is 50% PPR, 50% non-PPR. As such you pay CGT on 50% of the increase in value.


See Page 34 of this revenue guide: CGT1 - Guide to Capital Gains Tax

Ok, here's me being ever-so-hopeful, given that I bought in the boom and will lose money on this house regardless, is it CGT on the money I make from the property after the loan or the increase in value from the time I bought it which will actually be at a loss...???

PS I do enjoy getting the views of the randoms. I hate the small print of those revenue guides, can never make head or tail of them!

Samuel T. Cogley

misc2013 wrote: »

Nah...the idea is only new. Is having a house already an advantage or disadvantage? Does it depend on the amount of loan left or loan to current value?

It's a disadvantage I'm afraid as you enter into what's called a chain. You sell and buy on the same day along with the person buying your house, and the person buying your buyers house etc. etc.

However you're in a unique position of being able to sell and then buy making you a chain free buyer which is what a vendor ideally looks for. It means you can offer under the highest bid and potentially still be accepted because of your status as chain free.

You're also renting the place which means if you can get to the LL/Vendor's minimum without them having to involve an agent you can get a few grand off there too. Some people just don't want the hassle over a few grand, some more business minded people will want the place to go to the open market.

Another disadvantage is it works the other way - the LL/Vendor knows you're invested in the place. We go stung bigtime that way in buying an apartment in the complex where we were renting. Keep your options as open as possible.

First step though is a mortgage.

The very best of luck I hope it all works out in the best possible way for you.

Samuel T. Cogley

misc2013 wrote: »

Ok, here's me being ever-so-hopeful, given that I bought in the boom and will lose money on this house regardless, is it CGT on the money I make from the property after the loan or the increase in value from the time I bought it which will actually be at a loss...???

PS I do enjoy getting the views of the randoms. I hate the small print of those revenue guides, can never make head or tail of them!

Sell at a loss and no CGT to pay!

In fact you get to carry over that loss for a period (forget how long) to your next investment property.

Graham

Samuel T. Cogley wrote: »

Sell at a loss and no CGT to pay!

In fact you get to carry over that loss for a period (forget how long) to your next investment property.

+1

CGT is calculated on the increase (gain) in value.

misc2013

Samuel T. Cogley wrote: »

Sell at a loss and no CGT to pay!

In fact you get to carry over that loss for a period (forget how long) to your next investment property.

Really? Do they take into account the original price paid? I will be probably 40/50K down on what I paid. I thought the revenue, being the curse it is, would see the difference after paying off the rest of my mortgage as profit even tho it's a loss overall. That would make a big difference.

misc2013

Graham wrote: »

+1

CGT is calculated on the increase (gain) in value.

This would make a world of difference.

Graham

E.g.

Price paid €300,000, value now €200,000

No gain. €100,000 loss.

Fol20

Samuel T. Cogley wrote: »

Yeah that needs correction. The tenants need 196 days notice and a PPR needs to be the primary residence where you're expected to be found.

Even then cgt is calculated on a pro rata basis

misc2013

Next question. Any advice on timing sale of house? my tenants have a lease til February. I was going to offer to sell to them first but otherwise...with the 6 months notice, when would be best to actually put house on the market? Are houses moving quickly these days? Seems to be suddenly lots of for sale signs up. I want to be fair to the tenants too if buying is not an option.



So much to think about....

Samuel T. Cogley

misc2013 wrote: »

Next question. Any advice on timing sale of house? my tenants have a lease til February. I was going to offer to sell to them first but otherwise...with the 6 months notice, when would be best to actually put house on the market? Are houses moving quickly these days? Seems to be suddenly lots of for sale signs up. I want to be fair to the tenants too if buying is not an option.



So much to think about....

Does you lease have a break clause?

As for selling it really depends where it is, that said the property market is fairly buoyant at the moment.

misc2013

Samuel T. Cogley wrote: »

Does you lease have a break clause?

As for selling it really depends where it is, that said the property market is fairly buoyant at the moment.

don't think so. am trying to figure out timing in line with lease ending in early feb. Only considered selling cos we've been given the opportunity to buy our rented house.

jimmycrackcorm

hawkelady wrote:

Do not buy the new house in your partners name ffs !! If things turn sour are you happy for him to have the house outright and for you to be turfed out on your ear with nothing to show. Talk to a solicitor btw as they will advise you

This is not correct advice. OP is married so the house becomes the family home and is protected as such.

Being married also implies that you cannot be a first-time buyer if one person had already purchased .

hawkelady

jimmycrackcorm wrote: »

hawkelady wrote:

Do not buy the new house in your partners name ffs !! If things turn sour are you happy for him to have the house outright and for you to be turfed out on your ear with nothing to show. Talk to a solicitor btw as they will advise you

This is not correct advice. OP is married so the house becomes the family home and is protected as such.

Being married also implies that you cannot be a first-time buyer if one person had already purchased .

You have greater protection if your name is on the bloody deeds tbh. Any solicitor worth their salt will say the same

misc2013

Anyone have any experience of selling with longterm tenants in place? Am trying to work out timeframe. Is it 6 months notice to house going on sale or notice to the day the house is actually sold/ keys given etc?? Estate agent reckons house will move very quickly as it is very highly sought. He even said within a month.

PhoenixParker

I would start by working out whether you need to sell your rented home to buy your new home.

Forget about names on deeds etc. You're buying a family home and you're married, absent exceptional circumstances you'll be buying it together with both names on the deeds and not as first time buyers.

Go talk to your bank and/or a mortgage broker to see what they say. If you don't need to sell you can get on with buying the house you want and go from there.

If the conclusion is you need to sell, then start that process. Issue the notice and talk to your tenants. They may be open to moving sooner or buying the house from you. Talk to an accountant about the tax implications. Talk to an estate agent about the sale and value.

Catlady76

standardg60 wrote: »

Open to correction on this but as far as I know..

Put the house on the market (in which case the tenants are obliged to vacate within the standard 30 days) at an unrealistically high price.
Leave the house vacant for six months in which case it returns to being your principle and private residence not subject to cgt.
Reduce the price to a realistic level.

As the tenants are there 7 years they are legally entitled to alot more notice then 30 days that is for sure as I was a renter myself for 6 years and the LL said she was selling and I rang the RTB and we were entitled to 140 days.