Buying Second house in dublin

rsh_31

Hello, One of my frd need suggestions. Let me put the story in this was, He has bought a double bedroom flat in 2016 for a price 230,000 (making round figures), has took mortgage of 170,000 at that time, currently pays monthly mortgage around 800 euros. He is thinking of buying second house which is 3 bed house, may be coast around 400,000. If he rents the old house, he would get a rent of may be around 1700 per month. He want to know what are tax implications and what is his profit per month from renting first one, if he keeps first house and buy the second one (assuming he has deposit amount for second house). Is it good Idea to rent first house or sell off?

DubCount

There is so much in this its hard to know where to start. Even before you get to taxation, your friend needs to consider if his mortgage repayments will change when he/she moves from a residential rate to a buy2let rate. Does your friend know all the rules and regulations on letting property - For example, telling a prospective tenant you dont take HAP could cost thousands as could giving an incorrect notice to a sitting tenant. Can your friend financially survive a bad tenant who does not pay rent and can take well over a year and big legal costs to evict.

As for taxes, your friend must pay income tax, PRSI and USC on the rental income. Only the interest portion of the mortgage repayments can be allowed as a deductible expense. Renting out the property will impact the full application of principal private residence relief for CGT.

Renting property is not a game for the amateur any more. If your friend really wants to go there, go get some professional advice because a quick message on boards will not cover it. My advice is stay away.

Sarn

Assuming he has the 20% deposit, will he be able to get a combined mortgage of about €480k? The lender may or may not take the rental income into account.

handlemaster

DubCount wrote: »

There is so much in this its hard to know where to start. Even before you get to taxation, your friend needs to consider if his mortgage repayments will change when he/she moves from a residential rate to a buy2let rate. Does your friend know all the rules and regulations on letting property - For example, telling a prospective tenant you dont take HAP could cost thousands as could giving an incorrect notice to a sitting tenant. Can your friend financially survive a bad tenant who does not pay rent and can take well over a year and big legal costs to evict.

As for taxes, your friend must pay income tax, PRSI and USC on the rental income. Only the interest portion of the mortgage repayments can be allowed as a deductible expense. Renting out the property will impact the full application of principal private residence relief for CGT.

Renting property is not a game for the amateur any more. If your friend really wants to go there, go get some professional advice because a quick message on boards will not cover it. My advice is stay away.

not to forget the government s latest goal moving with regard to getting landlords to upgrade the energy rating.

Samuel T. Cogley

1700 and a 800 mortgage he's not going to see much 'profit' in terms of money in his pocket he'll see it in terms of equity in the property with all the inherent risks therein. He needs to keep a substantial buffer for emergency maintenance and potential legal fees and non payment.