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11-09-2019, 17:09   #1
ismisecraic
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Advice sought on selling / buying

Just wanted to ask for people’s opinion.

I guess I am at a cross roads but am fortunate that I am in the position I am in.

Bought affordable unit (3 bed duplex) in 2006, have 83k owing on it and its plenty big for family comfort etc.

Never saw myself living in it forever and have thought about moving more into a 3 bed semi with garden and driveway in locality where im from.

Option 1.

Sell affordable unit, for market of say 240k , pay 70k clawback , pay balance of loan 83k, which leaves 87k to be used to leap frog into unit for 340k in area I want and move.

Option 2.

Keep affordable unit. Save llike a mad thing for the next year or two for a deposit and apply with wife for mortgage (both mid 30’s and with OH part time our annual income is 93k and with her full time it will be about 110/120k) , Rent affordable unit to sibling for reasonible amount, say 1200 p/m and cover off the mortgage (700e) and pay it off a bit early or have the balance contribute towards new mortgage.

Idea behind Option 2 is that i will always have rental income or i can sell it further down the line.

What would anyone else do? Am i bringing on hassle by being a 'landlord'

Will I need a strict 20% deposit to purchase the 340k house if I run with option 2?

Will the banks be a big no no about me holding on to the Affordable unit or does it stand to me for my application?

Is there anything im missing tax wise other than NPPR?

Thanks in advance
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11-09-2019, 17:51   #2
Samuel T. Cogley
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1200pm wont cover a 700 mortgage.
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11-09-2019, 18:13   #3
ismisecraic
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Quote:
Originally Posted by Samuel T. Cogley View Post
1200pm wont cover a 700 mortgage.
I assume you mean if its registered correctly with revenue and prtb etc

Maybe I meant to say 'rent out 2 rooms to two siblings for 600e pm each'
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11-09-2019, 18:45   #4
Humour Me
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Originally Posted by ismisecraic View Post
I assume you mean if its registered correctly with revenue and prtb etc

Maybe I meant to say 'rent out 2 rooms to two siblings for 600e pm each'
Still won’t cover it. Rent a room relief is only available where the rooms are let in your Primary residence. Revenue will be aware that you purchased a new property which will be your new PPR.

Bear in mind that if you keep the property and rent it out you will have to pay capital gains tax on the increased value when you go to sell. No capital gains due if you sell your current PPR to purchase a new one.
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11-09-2019, 19:16   #5
ismisecraic
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Still won’t cover it. Rent a room relief is only available where the rooms are let in your Primary residence. Revenue will be aware that you purchased a new property which will be your new PPR.

Bear in mind that if you keep the property and rent it out you will have to pay capital gains tax on the increased value when you go to sell. No capital gains due if you sell your current PPR to purchase a new one.
So it's the difference by weighing up if the rental income would be worth it.

Also if I was to ultimately keep it for my children, I'd imagine I can sign it over to them in (long) future
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11-09-2019, 19:47   #6
daithiK1
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When does the 70k claw back end
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11-09-2019, 19:51   #7
XsApollo
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I don’t think your allowed rent out affordable housing.
Also you can ask the council , they will let you rent it out but your clawback years wont be going down while it’s being rented.
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11-09-2019, 20:00   #8
Darc19
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With the claw back it drops 10% each year from year 11 to 20.

Its also on the market value discount you got in 2006

Lets say you got €100,000 reduction from the declared market price. (usually higher than actual market price)

Then this year the claw back is €70,000, next year its €60,000 and so on.

So by sitting still and doing nothing you are gaining 10k a year.

Possibly you have a tracker Mortgage too? You'd be adding 1% on any mover tracker.


I'd stay put and maybe treat yourselves to a couple of extra breaks away and plan for a dream home in about 5/6 years.
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11-09-2019, 21:26   #9
ismisecraic
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Originally Posted by daithiK1 View Post
When does the 70k claw back end
It will reduce so ultimately in 7 years it will be gone
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11-09-2019, 21:27   #10
ismisecraic
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Originally Posted by XsApollo View Post
I don’t think your allowed rent out affordable housing.
Also you can ask the council , they will let you rent it out but your clawback years wont be going down while it’s being rented.
You are allowed rent it out. It's a rubber stamp job with the council.
Clawback is paused but if I don't seel it and keep it I will be keeping it past year 20 whwn the clawback will be gone
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11-09-2019, 21:29   #11
ismisecraic
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Quote:
Originally Posted by Darc19 View Post
With the claw back it drops 10% each year from year 11 to 20.

Its also on the market value discount you got in 2006

Lets say you got €100,000 reduction from the declared market price. (usually higher than actual market price)

Then this year the claw back is €70,000, next year its €60,000 and so on.

So by sitting still and doing nothing you are gaining 10k a year.

Possibly you have a tracker Mortgage too? You'd be adding 1% on any mover tracker.


I'd stay put and maybe treat yourselves to a couple of extra breaks away and plan for a dream home in about 5/6 years.
As in hold tight and then sell to just upgrade.
We have talked that 70 claw back would be more than enough to do lots of work in a house.
Only thing is I will be early 40s looking at a mortgage with a bank
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11-09-2019, 22:15   #12
XsApollo
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Quote:
Originally Posted by ismisecraic View Post
You are allowed rent it out. It's a rubber stamp job with the council.
Clawback is paused but if I don't seel it and keep it I will be keeping it past year 20 whwn the clawback will be gone
If you keep it and don’t rent it out yes.

I’m not sure if you can leave it idle either?
It states you must live in it..
I own an affordable house myself.

And I meant renting it out without informing them, is not allowed. I’m not sure what the penalty is but repossession might be one of them.
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11-09-2019, 22:16   #13
ted1
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Originally Posted by Samuel T. Cogley View Post
1200pm wont cover a 700 mortgage.
It will if you do the taxes correctly
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11-09-2019, 22:17   #14
ted1
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Originally Posted by XsApollo View Post
I don’t think your allowed rent out affordable housing.
Also you can ask the council , they will let you rent it out but your clawback years wont be going down while it’s being rented.
The councils let you do it
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11-09-2019, 22:19   #15
ted1
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Originally Posted by Humour Me View Post
Still won’t cover it. Rent a room relief is only available where the rooms are let in your Primary residence. Revenue will be aware that you purchased a new property which will be your new PPR.

Bear in mind that if you keep the property and rent it out you will have to pay capital gains tax on the increased value when you go to sell. No capital gains due if you sell your current PPR to purchase a new one.
Capital gains is only on the price difference between purchase price and sales price. OP has it increased much ?

I’d keep it and use it as a pension.
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