Should I sell or rent ...

Scoobs86

I'm looking for opinions from landlords to aid in a decision I need to make.
I've a tracker on a vacant large semi-d in a Dublin suburb which I kept when I moved out in 2006 - not my best decision. Tenants wise I've had bad (think neighbour conflicts, non-payment, Gardai) and good (last 6 plus years with a family who kept it as their home). Last rental was below market rent but it does cover costs (mortgage, prop tax, insurance, maint. etc.). It doesn't cover the tax bill (circa 8k per annum) but at current rental it is paying down double that on the capital - 16 years left on mortgage.
So given the Irish market, Brexit, capital being cleared down, bad tenant risks - is it time to sell up? Or do I look to rent it again and hope to get a good tenant?
Thanks in advance for your consideration.

Effects

I'd rent it again, and see how it goes. Selling market isn't great at the moment I thought.

Xterminator

if you sold now, what kind of return on investment would you see. Assuming its a positive return what would you do with the lump sum, now interest rates are near zero. would you be able to invest in a savings product or your pension, etc that would return at greater than inflation?

basing on the past what would you estimate you annual outgoings would be, including tax etc, for the house if you keep it, and what would the expected return be when the mortgage is clear.

would the difference between the two returns be worth the risk of being a landlord in ireland, and all the hassles that go along with it?

have you considered Long Term Leasing Initiative with council to take the management of the property off your hands for 10+ years, so your income is predictable and the council manage the landlord bit? It might be a good compromise between being a landlord, and not being one, without surrendering the house until mortgage is finished.

Lots of properties to rent at the moment and there is a small risk that selling a property may be removed as a reason for ending a part 4 tenancy. There is still demand for property purchases so if I were you, I would at least get it valued and check with local auctioneers to see if your type of house is selling well in the locality. If it is, let it off, renting isn’t getting easier and the risks of a bad tenant are still there, plus appreciation in price is likely to be stunted for the foreseeable future. Do you need the hassle?

fliball123

You could give it to the council and get 85% of the current rent for the next 20 years, you can write off all interest on the mortgage and the council has to give it back to you the way you gave it. If like another poster suggests do you need the hassle you could do this and forget about it for 20 years and have a house fully paid off by someone else

wildwillow

The real problem is that if you make a profit there is no investment that will give you any sort of return.

Do you have a mortgage on your residence? You could put any profit towards paying that off and be mortgage free sooner.

Money to spend then in the future, possibly for college fees or just to make life easier.

beauf

Effects wrote: »

I'd rent it again, and see how it goes. Selling market isn't great at the moment I thought.

Its slow for various reasons, but many are reporting selling well over asking.

beauf

Scoobs86 wrote: »

I'm looking for opinions from landlords to aid in a decision I need to make.
I've a tracker on a vacant large semi-d in a Dublin suburb which I kept when I moved out in 2006 - not my best decision. Tenants wise I've had bad (think neighbour conflicts, non-payment, Gardai) and good (last 6 plus years with a family who kept it as their home). Last rental was below market rent but it does cover costs (mortgage, prop tax, insurance, maint. etc.). It doesn't cover the tax bill (circa 8k per annum) but at current rental it is paying down double that on the capital - 16 years left on mortgage.
So given the Irish market, Brexit, capital being cleared down, bad tenant risks - is it time to sell up? Or do I look to rent it again and hope to get a good tenant?
Thanks in advance for your consideration.

I think you have look at the bigger picture. If its paying for itself, and even if it isn't do you need the money. If not and you can afford a bad tenancy, then why not keep it.

Otherwise do you want the hassle. If you had bad tenants, could you cover the cost.

If were me I'd sell, come back into it, maybe in two years and hopefully they'll have fixed the tenant issues with the legislation. If you have a mortgage and interest rate rise you might better clearing that.

DubCount

Sell sell sell...

Housebuying

You haven't really stated how much equity is in the house, if you will have to pay capital gains, if you have bought another property.

I'm asking as I'm wondering would you like to sell now to rebuy a home in the future. Or are you talking about a good long term investment?


Renting is a pain if things go badly but it is a good return on investment long term. The selling market is very good at the moment with the lack of supply but prices are a bit lower.

Woshy

I was in a similar position and we rented it out. It just wasn't worth it - the hassle, the tax, all the repairs etc. and we had good tenants.

I would advise selling, depending on the price you can get and tax owed etc.

Scoobs86

Thanks for responses.
Some more info as some requests for more context. if I sell it then after CGT etc I'll have circa 80k. It makes 8k p.a. and I fund an additional 8k p.a. paying down 16k on the mortgage. I have family home (tracker so not paying that off), pension & college sorted too BTW. This is investment money.
Do I look on that as a 10% after tax return cos if I do then that beats any possible return elsewhere. Since 2006 it has lost circa 25% capital so am I loosing that if I sell now? if I wait another 10 years is it likely move up that 25%? Selling would be removal of responsibility and the maintenance of a second house...

Will look into the Long Term Leasing but not so sure as totally loosing control.

Majority recommending sell because of the "hassle" but maybe I have been spoiled with good tenants recently which means perhaps I'm looking through rose coloured glasses. Assuming majority of family renters are good tenants then I should be okay?
I'm changing my mind literally every hour at this stage...

mousblaster17

Effects wrote: »

I'd rent it again, and see how it goes. Selling market isn't great at the moment I thought.

Selling market isn't great? Can you provide evidence to back this assertion up?

beauf

Scoobs86 wrote: »

Thanks for responses.
Some more info as some requests for more context. if I sell it then after CGT etc I'll have circa 80k. It makes 8k p.a. and I fund an additional 8k p.a. paying down 16k on the mortgage. I have family home (tracker so not paying that off), pension & college sorted too BTW. This is investment money.
Do I look on that as a 10% after tax return cos if I do then that beats any possible return elsewhere. Since 2006 it has lost circa 25% capital so am I loosing that if I sell now? if I wait another 10 years is it likely move up that 25%? Selling would be removal of responsibility and the maintenance of a second house...

Will look into the Long Term Leasing but not so sure as totally loosing control.

Majority recommending sell because of the "hassle" but maybe I have been spoiled with good tenants recently which means perhaps I'm looking through rose coloured glasses. Assuming majority of family renters are good tenants then I should be okay?
I'm changing my mind literally every hour at this stage...

Well not just hassle more the high risk of no income due to the current conditions. If you were under financial hardship.

But if it's just investment, and no other financial demands then I'd keep it and rent again.

Context is everything...

fliball123

Scoobs86 wrote: »

Thanks for responses.
Some more info as some requests for more context. if I sell it then after CGT etc I'll have circa 80k. It makes 8k p.a. and I fund an additional 8k p.a. paying down 16k on the mortgage. I have family home (tracker so not paying that off), pension & college sorted too BTW. This is investment money.
Do I look on that as a 10% after tax return cos if I do then that beats any possible return elsewhere. Since 2006 it has lost circa 25% capital so am I loosing that if I sell now? if I wait another 10 years is it likely move up that 25%? Selling would be removal of responsibility and the maintenance of a second house...

Will look into the Long Term Leasing but not so sure as totally loosing control.

Majority recommending sell because of the "hassle" but maybe I have been spoiled with good tenants recently which means perhaps I'm looking through rose coloured glasses. Assuming majority of family renters are good tenants then I should be okay?
I'm changing my mind literally every hour at this stage...

Have you looked into letting the gov rent it at 85% of current market rent, you can right off all interest and get the house back the way you gave it?

Browney7

Scoobs86 wrote: »

Thanks for responses.
Some more info as some requests for more context. if I sell it then after CGT etc I'll have circa 80k. It makes 8k p.a. and I fund an additional 8k p.a. paying down 16k on the mortgage. I have family home (tracker so not paying that off), pension & college sorted too BTW. This is investment money.
Do I look on that as a 10% after tax return cos if I do then that beats any possible return elsewhere. Since 2006 it has lost circa 25% capital so am I loosing that if I sell now? if I wait another 10 years is it likely move up that 25%? Selling would be removal of responsibility and the maintenance of a second house...

Will look into the Long Term Leasing but not so sure as totally loosing control.

Majority recommending sell because of the "hassle" but maybe I have been spoiled with good tenants recently which means perhaps I'm looking through rose coloured glasses. Assuming majority of family renters are good tenants then I should be okay?
I'm changing my mind literally every hour at this stage...

How many years PPR relief have you? Won't every year you continue to hold dilute the relief and thus increase the GCT you've to pay? Worth factoring in to calculations.

You could use funds to invest in a pension (if not already maxing it out) and get the tax relief going in.

wyndham

Scoobs86 wrote: »

Thanks for responses.
Some more info as some requests for more context. if I sell it then after CGT etc I'll have circa 80k. It makes 8k p.a. and I fund an additional 8k p.a. paying down 16k on the mortgage. I have family home (tracker so not paying that off), pension & college sorted too BTW. This is investment money.
Do I look on that as a 10% after tax return cos if I do then that beats any possible return elsewhere. Since 2006 it has lost circa 25% capital so am I loosing that if I sell now? if I wait another 10 years is it likely move up that 25%? Selling would be removal of responsibility and the maintenance of a second house...

Will look into the Long Term Leasing but not so sure as totally loosing control.

Majority recommending sell because of the "hassle" but maybe I have been spoiled with good tenants recently which means perhaps I'm looking through rose coloured glasses. Assuming majority of family renters are good tenants then I should be okay?
I'm changing my mind literally every hour at this stage...

What CGT? You are selling at a 25% loss.

Browney7

wyndham wrote: »

What CGT? You are selling at a 25% loss.

Presumably bought before 2006 so value is higher than paid for and OP has anchored the 2006 high point as where they think property may get to at some stage.

Noah G

Hi folks

How much would you be taxed if make 21,600 from rent a year ?

Bandana boy

fliball123 wrote: »

Have you looked into letting the gov rent it at 85% of current market rent, you can right off all interest and get the house back the way you gave it?

This is usually not an option if you are on a tracker as to avail of this scheme you must notify your bank , this will often alert the bank that you have changed the terms of the mortgage and as such they can remove the tracker.

8k a year for 16 years will cost you 130k , what could you expect house to be worth in that time .

That less the 80k equity you have now if you sell is the calculation .

Do those maths and if you like the numbers keep otherwise sell

Bandana boy

Noah G wrote: »

Hi folks

How much would you be taxed if make 21,600 from rent a year ?

Depends on your other income , but if currently paying top rate of tax on your income then ~ half

Aron722

Bandana boy wrote: »

Depends on your other income , but if currently paying top rate of tax on your income then ~ half

That's crazy loseing half it , I know people who get 14k a year tax free or could just get cash in hand

Wouldn't say alot of landlords would like losing that much and try get around it .

DubCount

Aron722 wrote: »

That's crazy loseing half it , I know people who get 14k a year tax free or could just get cash in hand

Wouldn't say alot of landlords would like losing that much and try get around it .

Nobody likes paying tax - even landlords. But the tax system we have is for everyone and if you are on a high marginal rate of tax, between income tax, USC and PRSI it could be 50% or even a bit more.

The 14k tax free is only for the rent a room scheme. Its not a general allowance for landlords. Besides, if your rental income is 14,001 or more, you dont qualify at all.

Accepting cash payments to evade tax is illegal. I doubt many landlords would even consider this. Certainly, I would not advise anyone to risk a criminal record, fines and maybe even prison to save a few bucks in tax.

Aron722

DubCount wrote: »

Nobody likes paying tax - even landlords. But the tax system we have is for everyone and if you are on a high marginal rate of tax, between income tax, USC and PRSI it could be 50% or even a bit more.

The 14k tax free is only for the rent a room scheme. Its not a general allowance for landlords. Besides, if your rental income is 14,001 or more, you dont qualify at all.

Accepting cash payments to evade tax is illegal. I doubt many landlords would even consider this. Certainly, I would not advise anyone to risk a criminal record, fines and maybe even prison to save a few bucks in tax.

Not a few bucks no but over but over 10k isnt a few bucks. One of the people I know has a granny flat beside the house with a door leading into the house aswell as the flat having it's own entrance. Its down as rent a room as its technically a room just has a bathroom and kitchen. She has it renting out to a non Irish citizen .

fliball123

Bandana boy wrote: »

This is usually not an option if you are on a tracker as to avail of this scheme you must notify your bank , this will often alert the bank that you have changed the terms of the mortgage and as such they can remove the tracker.

8k a year for 16 years will cost you 130k , what could you expect house to be worth in that time .

That less the 80k equity you have now if you sell is the calculation .

Do those maths and if you like the numbers keep otherwise sell

True but under this scheme 100% of the interest is written off before you get taxed on your rental income

Bandana boy

fliball123 wrote: »

True but under this scheme 100% of the interest is written off before you get taxed on your rental income

As opposed to 75% normally and 100% if you rent to a HAP client anyway , will still cost you thousands a year from being on the tracker.

on 300K with 20 years left interest on a tracker would be ~23-30K
on current investment properties mortgage rates ~110K -125K

Even if you don't get a HAP client your out of pocket over 40K

fliball123

Bandana boy wrote: »

As opposed to 75% normally and 100% if you rent to a HAP client anyway , will still cost you thousands a year from being on the tracker.

on 300K with 20 years left interest on a tracker would be ~23-30K
on current investment properties mortgage rates ~110K -125K

Even if you don't get a HAP client your out of pocket over 40K

I think the kicker for what I was suggesting is that you don't have to worry about the property or tenants or any of that mess the state looks after both and they have to give the property back to you the way you gave it to them so they are on the hook for all repairs

JimmyVik

I would post this on askaboutmoney.com.
They do very good analysis of investments there.

Personally I wouldnt touch rentals in Ireland with a barge pole. Unless I was a REIT and paid no tax.
Risk/Reward is atrocious for landlords in Ireland.
Also if the rental income of the property is locked at a low rate by regulations the sale value will be hit too.
You could be looking at a huge hit in the sale value.

California Dreamer

Scoobs86 wrote: »

I've a tracker /QUOTE]

That's all I needed to hear!!!

You will never get those rates every again so stay put, rent it out, pay off the mortgage and have a nest egg for yourself in another 15ish years I assume.

Housebuying

It's good to diversify your pension. Heading into retirement with a mortgage free rental home and a private shares pension is a very nice position to be in.


Don't forget, if you change you mind later in life and decide you want a second property, you may need up to 25% cash for a deposit. I'm sure you are on a more favourable rate compared to today's.

I would hang onto it.