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06-03-2019, 17:10   #1
katie275
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Rent or sell my apartment?

Hi All,

Just looking for some input here...

I bought my apartment in 2014, current mortgage is around e700 per month.
In the process of completing a house sale with my partner.
If i sold the apartment, I would probably make about 40-50k.
The house we are moving to needs a lot of work so selling is very tempting!
Several people have told me that I would be crazy to sell.
Apartment would yield about 1600 per month, I'd see around half of that after the taxman gets his share. Would just about break even after mortgage and management fees are paid.
Have also considered renting to SDCC and getting 80% market value rent with no 'hassle' of being a landlord. I'm conscious of the over-regulation for landlords and horror stories that I have read and the prospect does make me feel overwhelmed, although I have tried to educate myself as much as possible.
Partner and I have a good combined salary and I have a private pension.

My uncertainty - is hanging onto the apartment the best option?

Thanks in advance!
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06-03-2019, 17:13   #2
Augeo
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If the €40/€50k would be of use to ye now I'd sell.

Admittedly €200K+ in 20 years time would be nice too but a bird in the hand and all that.
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06-03-2019, 17:20   #3
tretorn
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The legislation regarding tenancy is very skewed in favour of the tenant and its getting more skewed.

For example its looking like very soon you will have to give tenants four months notice if you want to sell the apartment in the future. Some tenants wont leave, some for genuine reasons like they cant find somewhere else and in this case Threshold is telling them to overhold.Its a long expensive hassle to get them out and they could stop paying rent and damage your property and you wont be compensated for this.

Prices are very strong now and they could collapse. If they do collapse apartment prices will fall first and you could be left with something you cant get rid of.

You will pay a lot of tax on the rental income, you will pay property tax, costs of registering the property with the RTB, you will pay for all repairs to the property including things like replacing white goods that are abused.

I think property is a good investment if you have another property that you can write tax off against or if you are good with your hands and can do repairs yourself. If you pay someone to manage the property you will pay maybe 7% of the annual rent for this and this is on top of a full months rent every time you get a new tenant. Its not the cash cow its made out to be.
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06-03-2019, 17:22   #4
GGTrek
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Quote:
Originally Posted by katie275 View Post
Hi All,

Just looking for some input here...


My uncertainty - is hanging onto the apartment the best option?

Thanks in advance!
Definitely not if you are planning to rent it. My suggestion is to sell, too much political risk. With the new laws on the horizon, you might never be able to sell your property vacant, causing a massive devaluation. Please check the threads on this forum about bills that are going through the Oireachtas. The 40-50k could be wiped out very quickly due to socialist regulations.
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06-03-2019, 17:23   #5
Thoie
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Quote:
Originally Posted by katie275 View Post
Hi All,

Just looking for some input here...

I bought my apartment in 2014, current mortgage is around e700 per month.
In the process of completing a house sale with my partner.
If i sold the apartment, I would probably make about 40-50k.
The house we are moving to needs a lot of work so selling is very tempting!
Several people have told me that I would be crazy to sell.
Apartment would yield about 1600 per month, I'd see around half of that after the taxman gets his share. Would just about break even after mortgage and management fees are paid.
Have also considered renting to SDCC and getting 80% market value rent with no 'hassle' of being a landlord. I'm conscious of the over-regulation for landlords and horror stories that I have read and the prospect does make me feel overwhelmed, although I have tried to educate myself as much as possible.
Partner and I have a good combined salary and I have a private pension.

My uncertainty - is hanging onto the apartment the best option?

Thanks in advance!
I had a similar quandry when moving about 2 years ago. People said I'd be mad to sell, as the rents were high. Like you, I figured that after tax and other outgoings, I'd just about break even, but in the meantime I'd have to either become a landlord (with trips to the apartment as required), or pay an agent to manage it for me. Any "extra" thing happening (like pump/immersion/appliances needing to be replaced, or painting/decorating) would end up costing me money, even if I could reclaim some of it.

I also considered the SDCC option, but in the end decided against it, and just sold.

I moved 2-3 hours away from there - if I was living closer I *might* have considered it, but my heart wasn't really in putting in the effort to manage the place myself. I was also concerned that even if I had an agent (or SDCC was essentially the agent), if there were problems with the tenants, I'd still end up getting calls from my ex-neighbours, all of whom I liked.
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06-03-2019, 17:39   #6
Springfields
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Sell up. That 40k will go a long way to sorting your new place. If you're just breaking even when renting it's not worth the hassle. Too risky and as previous posters has seated everything is in favour of tennants should a problem arise. Good luck
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06-03-2019, 17:43   #7
Samuel T. Cogley
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Bad tenants etc. Is over reported but a real issue if you're the one caught out. It can cost you thousands to resolve. The other issue to consider is what happens when sanity returns to rents and you probably won't be allowed to sell unless it so happens the tenant leaves.
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06-03-2019, 17:45   #8
DubCount
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Just a couple of things to consider. If you do rent it out, it will impact on your Capital Gains Tax when you do eventually sell. Also, your current mortgage repayments are based on Owner Occupier Rates - you need to declare your change of use to your mortgage provider, and mortgage repayments/interest will very likely increase.

Do your maths carefully considering everything from RTB registration fees to insurance before making a decision.
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06-03-2019, 17:50   #9
steamsey
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So you'd basically make no money on renting - but would be out of pocket for repairs etc. What you gain is someone paying your mortgage - this is why it's such a long game. The question is whether you want an asset there for when you retire or not, and if you do - are you willing to deal with 20 years of tenants, repairs, fire and water damages (The Beacon) etc etc. If not - sell and never have to worry about tenants, rental income tax etc etc again.

Also think about:

- Will you be close enough to the apartment to get to it if you need to help tenants with something?

- Have you factored in TRS being withdrawn when place is rented? (assuming you were getting TRS)

- Renting privately is a generally a much safer bet than HAP / SDCC etc (I know that you legally can't refuse HAP)

- Who is going to do tax returns each year with preliminary tax due year one? They're not overly complicated but you want to make sure you're square with Revenue up front before it gets expensive and stressful

My general answer is sell. There can be a lot of stress in being a landlord, and a lot of risks. You have to rent very, very carefully - get good tenants and look after them. Better to pay a months mortgage yourself than rush people in who will break your heart.
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06-03-2019, 17:52   #10
steamsey
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Originally Posted by DubCount View Post
Just a couple of things to consider. If you do rent it out, it will impact on your Capital Gains Tax when you do eventually sell. Also, your current mortgage repayments are based on Owner Occupier Rates - you need to declare your change of use to your mortgage provider, and mortgage repayments/interest will very likely increase.

Do your maths carefully considering everything from RTB registration fees to insurance before making a decision.
Nah - you don't really have to declare this to the mortgage provider. As long as you're paying the mortgage on time, you'll never hear from them and they don't expect to hear from you

RTB and insurance are valid extra costs though
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06-03-2019, 17:55   #11
Browney7
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Quote:
Originally Posted by DubCount View Post
Just a couple of things to consider. If you do rent it out, it will impact on your Capital Gains Tax when you do eventually sell. Also, your current mortgage repayments are based on Owner Occupier Rates - you need to declare your change of use to your mortgage provider, and mortgage repayments/interest will very likely increase.

Do your maths carefully considering everything from RTB registration fees to insurance before making a decision.
Would the OP be able to benefit from the CGT exemption if property held for 7 years that was brought in approx 2013(?) to incentivise property investment?
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06-03-2019, 17:57   #12
bluetractor
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40-50k "profit" and all tax free. If you rent it for a few years and price does not go up, part of that will be taxable (probably 50% of the increase). Far too much hassle for the small "accidental" landlords these days. One bad tenant can cost thousands on top of the hassle. Also, plenty of property being built and combined with central bank restrictions, prices have plateaued.

Remember too that improvements to a home qualifies for the HRI scheme (13.5% tax credit up to 30k spend) (HRI scheme is expired) and possibly SEAI grants.

I'd sell, take the profit and then if your can, also use some of your taxable salary for a pension fund and get the max tax relief on that. But IMO, renting is for the big boys these days.

Last edited by bluetractor; 07-03-2019 at 11:15.
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06-03-2019, 19:27   #13
katie275
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Thanks for the advice all, very helpful! Also I hadn’t thought about the CGT - yikes!!

So if I were to sell the apartment, any profit is exempt from CGT as it has been my PPR, is that correct?
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06-03-2019, 19:39   #14
Edgware
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Stories about bad tenants do create doubts about renting but if you can hold on to it there is a good pension fund down the line.
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06-03-2019, 20:11   #15
1874
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Quote:
Originally Posted by bluetractor View Post
40-50k "profit" and all tax free. If you rent it for a few years and price does not go up, part of that will be taxable (probably 50% of the increase). Far too much hassle for the small "accidental" landlords these days. One bad tenant can cost thousands on top of the hassle. Also, plenty of property being built and combined with central bank restrictions, prices have plateaued.

Remember too that improvements to a home qualifies for the HRI scheme (13.5% tax credit up to 30k spend) and possibly SEAI grants.

I'd sell, take the profit and then if your can, also use some of your taxable salary for a pension fund and get the max tax relief on that. But IMO, renting is for the big boys these days.

Correct me if Im wrong, but that scheme is gone
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