Rent or sell investment property

susieball

I have a property that I used to rent out. Was going to sell it last year as so worried re tenants overloading and changes in letting laws. It's been vacant for a year, and I have been using a room in it sporadically for business - maybe 2 hours per week. This doesn't bring in much money, but at least I was there in property to see it was ok. It has no mortgage, but I would not get the money I paid for it, plus the extension and attic conversion. I could do with the money to help send kids to college - next year, and not have to work overtime, but I really dread renting it again. With the rent caps, I would get about 2450 per month. That would be 2k after management fee - I don't want to manage it myself due to time and health issues which means I have to be careful with my energy. After tax, I would come out with 10k - I am on 56k, so higher tax bracket. What would people advise - sell, given all the changes that might come, or rent it out. I was going to give it to my daughter to rent with 2 pals next year, but she is show messy and uncaring re stuff, I think she would just turn it into a complete mess.

Ray Palmer

Sell it and be done. I am selling up family rentals and my own due to the way things have gone. Look at investing in Portugal if you are retiring and you will see if that would work for you. Some tax advantages that can suit some

Browney7

susieball wrote: »

I have a property that I used to rent out. Was going to sell it last year as so worried re tenants overloading and changes in letting laws. It's been vacant for a year, and I have been using a room in it sporadically for business - maybe 2 hours per week. This doesn't bring in much money, but at least I was there in property to see it was ok. It has no mortgage, but I would not get the money I paid for it, plus the extension and attic conversion. I could do with the money to help send kids to college - next year, and not have to work overtime, but I really dread renting it again. With the rent caps, I would get about 2450 per month. That would be 2k after management fee - I don't want to manage it myself due to time and health issues which means I have to be careful with my energy. After tax, I would come out with 10k - I am on 56k, so higher tax bracket. What would people advise - sell, given all the changes that might come, or rent it out. I was going to give it to my daughter to rent with 2 pals next year, but she is show messy and uncaring re stuff, I think she would just turn it into a complete mess.

What are the potential sales proceeds? You need to view any investment decision in light of your total financial situation - are you maxing out pension contributions etc? Daughter could receive contributions from potential housemates to fund her college upkeep - you could pay for a cleaner to go in regularly if you're concerned about mess. You're also mentioning renting it for 2450 but then giving it to daughter next year - this introduces a complication if tenants refuse to leave a year down the line.

Are other smaller properties nearer the university your daughter will be going to more suitable? You mention you wouldn't get the money you paid for it - you need to talk to an accountant but this would be a capital loss and could be offset against realised gains elsewhere or realised gains on other investments you make in the future.

susieball

Thanks for replies. The potential proceeds would be 480k gross - no mortgage, no CAT as property would need to get 500k for that. I am mid 50s. I don't maimise contributions to pensions so many household bill with late teens/college going. Should be paying 500 per month - only paying 200 AVC. Employer pays 10% and I pay 4% plus 200 AVC per month. I worked part-time for many years, so pension is poor to date - now working full-time, but chronic health issue, which may mean I might not be able to work to 65. Have 19 years of UK State pension. I own my own home with no mortgage and a holiday home in Clare with no mortgage - the house in Clare was left to me 10 years ago.

Steer55

susieball wrote: »

Thanks for replies. The potential proceeds would be 480k gross - no mortgage, no CAT as property would need to get 500k for that. I am mid 50s. I don't maimise contributions to pensions so many household bill with late teens/college going. Should be paying 500 per month - only paying 200 AVC. Employer pays 10% and I pay 4% plus 200 AVC per month. I worked part-time for many years, so pension is poor to date - now working full-time, but chronic health issue, which may mean I might not be able to work to 65. Have 19 years of UK State pension. I own my own home with no mortgage and a holiday home in Clare with no mortgage - the house in Clare was left to me 10 years ago.

Factor in CGT if it wasn't your PPR.

susieball

HI! Steers, there would be no CGT as 480k is less than the price I paid for it plus the cost I spent on renovations.

Cocobeans101

10K (minimum) a year for no effort on your part is not a bad return on investment. Once you retire, you will earn more from your tax free allowance.

The Student

susieball wrote: »

I have a property that I used to rent out. Was going to sell it last year as so worried re tenants overloading and changes in letting laws. It's been vacant for a year, and I have been using a room in it sporadically for business - maybe 2 hours per week. This doesn't bring in much money, but at least I was there in property to see it was ok. It has no mortgage, but I would not get the money I paid for it, plus the extension and attic conversion. I could do with the money to help send kids to college - next year, and not have to work overtime, but I really dread renting it again. With the rent caps, I would get about 2450 per month. That would be 2k after management fee - I don't want to manage it myself due to time and health issues which means I have to be careful with my energy. After tax, I would come out with 10k - I am on 56k, so higher tax bracket. What would people advise - sell, given all the changes that might come, or rent it out. I was going to give it to my daughter to rent with 2 pals next year, but she is show messy and uncaring re stuff, I think she would just turn it into a complete mess.

Have you considered letting to the council on the long term leasing scheme. The council are your tenants and they assign the tenancy to someone on the housing list. You are only responsible for the roof and four walls of the property.

The council is responsible for everything else. You get (I think) 80% of market rent for no effort on your part.

Steer55

Steer55 wrote: »

Factor in CGT if it wasn't your PPR.

No CGT if there is no gain/profit on the sale. Op has confirmed it is being sold at a loss.

Op, you might think €10k is a good profit, it is only if you have good tenants.

Save yourself the stress of renting, sell.

gibgodsman

2450 Per Month Rent? Wow, the market really has gone absolutely insane

Mad_maxx

The Student wrote: »

Have you considered letting to the council on the long term leasing scheme. The council are your tenants and they assign the tenancy to someone on the housing list. You are only responsible for the roof and four walls of the property.

The council is responsible for everything else. You get (I think) 80% of market rent for no effort on your part.

Not a good idea with a property worth nearly half a million quid

Pkiernan

Renting would give you a pathetic 2% posttax return on your property, and 1 dodgy tenant could ruin everything for you.

Sell and invest in risk balance mutual funds.

https://m.independent.ie/irish-news/election-2020/rent-freezes-on-the-agenda-as-fianna-fail-seeks-to-win-back-tenants-38994754.html


Op, this will probably help you make your mind up.

beauf

gibgodsman wrote: »

2450 Per Month Rent? Wow, the market really has gone absolutely insane

It's meaningless to take rent out of context then apply a value judgement plucked from the air.

Mic 1972

Selling now at the peak of the market would advisable
Renting always comes with risks

DubCount

Cocobeans101 wrote: »

10K (minimum) a year for no effort on your part is not a bad return on investment. Once you retire, you will earn more from your tax free allowance.

…. for some reason, I guess you have never been a Landlord ….

handlemaster

Cocobeans101 wrote: »

10K (minimum) a year for no effort on your part is not a bad return on investment. Once you retire, you will earn more from your tax free allowance.

No effort no stress... what could go wrong.. there is always an innocent lamb on boards

TSQ

ttps://www.corkcity.ie/en/media-library-do-not-use/housing/leasing-information-booklet.pdf

Seems like an option if you are happy to let house for minimumof 10 years

pwurple

Sell it, your return is brutal and the risk is high.

Mic 1972

This is the best time to sell, it won't get any higher from now on

Steer55

Sell it, invest the money in something less stressful. You have left it vacant for a year, it's obvious your heart isn't in the renting business any more.

dontparkhere

I would definitely keep it. Accommodation for your daughter would cost 7/8k in Dublin for college. Someone might be able to clarify but if it is your daughters principle residence she could rent the rooms tax free up to 14k and use it to fund college ect. The other people renting would be licensees so no hassle with Rtb.

VonBeanie

dontparkhere wrote: »

I would definitely keep it. Accommodation for your daughter would cost 7/8k in Dublin for college. Someone might be able to clarify but if it is your daughters principle residence she could rent the rooms tax free up to 14k and use it to fund college ect. The other people renting would be licensees so no hassle with Rtb.

IMHO its not quite that simple. Providing a house to a child for free (or even below market value) represents a gift, so the impact on the lifetime CAT threshold would need to be considered. Establishing the Second home as the main residence for a child who is possibly returning home at weekends and holidays etc. is also not straightforward and is needed to use the 14k Rent a room scheme.

Contact a tax advisor if you plan something like this to make sure you are not creating bigger problems than you realise.