Hi Everyone, Im new to this so please be patient!!
shortly I will receive €130,000 from the sale of a house, I will have no CGT liability as I sold for excatly what I paid in 2008.
My Question is what should I do with this money,
My current situation is I am employed earning 40k p/a.
I own a local rental property, currently earns 15k p/a. balance on mortgage 124k. current value 270k.. 1.75% tracker
I own a rental property in Italy, currently rent 17k. mortgage balance 46k. value 250k.. 3.25%
I, my wife and son live in the house we built, value 300k debt 64k.. 3% loan
I Have no private pension or no money invested in the stock markets
I like property but not sure its a great time to buy, stock market is maybe a more long term game, should i pay off either rental, a mix of both? if invest in the markets where??
any advise would be great..
I'd invest in equities/bonds via your pension. Sounds like you've good Property exposure, and none of your debts are expensive.
Depending on your age (guessing 40's/50's?), maxing out your pension contributions, will allow you invest 25-35% of your base salary tax free.
I'm making up numbers, but say you earn €80k base, that allows you invest about €25k of your income tax free. The alternative is pay tax and have €12k after tax. If you need that €12k to live or mortgage repayments, take that from your €130k funds from the sale.
So live for 11 years off the €130k sale funds, and you've invested €275k via your pension.
You've just doubled your money.
I'd sit down with an advisor who will take more of your scenario into account before you make any decision.
Agree with Shedite27 you should aim to max your pension and talk to an advisor, and just to add to that:
Have a look at "special pension contribution" here https://www.revenue.ie/en/jobs-and-pensions/pensions/tax-relief-for-pension-contributions.aspx
With zero contributions last year, you can make a special pension contribution and then claim tax back on that amount.
You have plenty of exposure to property, so I would avoid further investment there. You could potentially pay off the 64k on your family home, but I think a well managed equity/bond portfolio would yield better returns long term vs the cost of the mortgage
Where did you get all that property on 40k? Well done.
Ha, Im near 50 now and earned more in my early career plus made some money buying and selling properties.
Framily home is 2 years into a 5 year fixed loan.
I would like to pay off the house in Italy, but not sure if is the right plan, the current mortgage payment is over 600 p/m and has another 7 ish years to go? mortgage interest is the only tax deduction I would miss.