Moving abroad - should I rent or sell my apartment

DMG1983

Hey,
I recently bought a 2 bed apartment in the Gasworks. I am moving abroad in June and I don't know whether I should keep the property and rent it out- the rent will easily cover the mortgage or sell it. I got it at a good price and have done quite a bit of work including replacing the kitchen and all the floors so if I sell it I will probably make a small profit.
If I sell the apartment now I won't have to pay capital gains tax but if I rent it and sell it in a few years I will.
Does anyone have any experience with a similiar situation or general advice, I am changing my mind every 5 minutes?!

D3PO

DMG1983 wrote: »

Hey,
I recently bought a 2 bed apartment in the Gasworks. I am moving abroad in June and I don't know whether I should keep the property and rent it out- the rent will easily cover the mortgage or sell it. I got it at a good price and have done quite a bit of work including replacing the kitchen and all the floors so if I sell it I will probably make a small profit.
If I sell the apartment now I won't have to pay capital gains tax but if I rent it and sell it in a few years I will.
Does anyone have any experience with a similiar situation or general advice, I am changing my mind every 5 minutes?!

Why the hell does everybody come on here with this mentality. You have to pay tax on the income, just because mortgage = X and Rent = greater than X doesn't mean you "easily cover the mortgage"

you have tax to pay, property tax, maintenance, EA management fee will set you back most likely over 10% of the rental income too.

re do your maths. I can assure you that you wont easily cover your mortgage. If your going to rent do it right and do it professionally, we have far too many amateur landlords as it is.

djimi

How long do you plan on moving abroad for, and do you want to have the property available to you when (if) you return?

My advice is if you are going abroad long term then you need to ask yourself if you actually want to be a landlord, and deal with the hassle and possible cost involved in keeping and managing a property? Especially from abroad where its going to be more hassle to deal with any issues that might arise.

djimi

D3PO wrote: »

I can assure you that you wont easily cover your mortgage.

If the Gasworks is the one that Im thinking of then the outrageous rents being charged there at the moment could well cover the mortgage and then some :eek:

DMG1983

Thanks for the replies,
I am not sure how long I will be abroad, at least 3 years anyway.
I would be using a property management company and I did do my maths D3PO the rent will easily cover the mortgage, the fees, the insurance and all other associated costs involved so there is no need to be so condescending.
I wanted to know if anyone in a similiar situation had any reservations because of their experience dealing with these things abroad.

Oral Surgeon

DMG1983 wrote: »

Thanks for the replies,
I am not sure how long I will be abroad, at least 3 years anyway.
I would be using a property management company and I did do my maths D3PO the rent will easily cover the mortgage, the fees, the insurance and all other associated costs involved so there is no need to be so condescending.
I wanted to know if anyone in a similiar situation had any reservations because of their experience dealing with these things abroad.

Tax??

DMG1983

Oral Surgeon wrote: »

Tax??

I am exempt from property tax as a first time buyer, I realise I will have to pay tax on the profit made from the rent received minus my mortgage repayments. I won't be making any profit once all the additional costs are all paid and I have factored in wear and tear also.
It's not really about making a profit from the rent or sale it's more about having a place at home that I know will be there if I want to come back but not if it's going to be a lot of hassle (if that makes sense!!)
I will be getting a property manager if I decide to rent but I imagine that there will still be a requirement for some level of input from me!

dori_dormer

I was in a similar situation to yourself a few years ago. We moved abroad for 1 year, which turned into 2 and a half. We rented out our apartment during that time. To be honest, I would say try and sell before you go.
It really is a huge hassle to be a landlord, let alone one abroad. Now we had to supplement our mortgage as rental didnt cover that let alone the added expenses, but apart from that the main thing was Revenue.

If you are not considered a resident in the country, you have to pay 20% tax on your income. There are no deductions allowed for like 12.5% of furniture costs over 8 years etc, fees or anything else to reduce this amount. Its 20% of the rent alone that you receive.

There are rules about being considered a resident on citizensinformation.ie for a particular year. It mainly relates to how many days you are in Ireland that year, previous year, following year.

We are hoping to sell our apartment now because the chances of us being sent abroad again are high and we dont want to get stuck with a huge tax bill again.

So other than the obvious issues that becoming a landlord will have, ask someone about the tax implications specific to you and the length of time youll be away.

Oral Surgeon

DMG1983 wrote: »

I am exempt from property tax as a first time buyer, I realise I will have to pay tax on the profit made from the rent received minus my mortgage repayments. I won't be making any profit once all the additional costs are all paid and I have factored in wear and tear also.
It's not really about making a profit from the rent or sale it's more about having a place at home that I know will be there if I want to come back but not if it's going to be a lot of hassle (if that makes sense!!)
I will be getting a property manager if I decide to rent but I imagine that there will still be a requirement for some level of input from me!

No, your mortgage is not a tax deductible expense, you can't factor it into the calculation!!

DMG1983

Oral Surgeon wrote: »

No, your mortgage is not a tax deductible expense, you can't factor it into the calculation!!

Oh ok thanks for that- I think I should still be ok but given what dori_dormer has said (and a few others I've spoke to) most would advise on selling before I go. I suppose it was a safety net keeping it but realistically I don't know if I'll ever be moving back! Cheers for the replies guys!!

3DataModem

DMG1983 wrote: »

I realise I will have to pay tax on the profit made from the rent received minus my mortgage repayments.

Nope. Tax on rent minus 75% of the interest element of your mortgage. How long left on your mortgage, and what is the interest rate?

TheBandicoot

DMG1983 wrote: »

it's more about having a place at home that I know will be there if I want to come back but not if it's going to be a lot of hassle !

Well bear in mind it might not be there for you- it could be tied up in the middle of a year-long lease when you return and you will have to wait for that to end.

3DataModem

TheBandicoot wrote: »

Well bear in mind it might not be there for you- it could be tied up in the middle of a year-long lease when you return and you will have to wait for that to end.

Best let the least roll over into a Part 4, then you can boot them out (with notice) when you want to return.

TheBandicoot

3DataModem wrote: »

Best let the least roll over into a Part 4, then you can boot them out (with notice) when you want to return.

True, just saying it's possible you never get a tenant who wants to stay on longer than a year, so you only have fixed-term leases, it happens.

DMG1983

3DataModem wrote: »

Nope. Tax on rent minus 75% of the interest element of your mortgage. How long left on your mortgage, and what is the interest rate?

I'm going to talk to a tax consultant before I decide what to do so I'm clear on all aspects- thanks for the reply!

DMG1983

TheBandicoot wrote: »

True, just saying it's possible you never get a tenant who wants to stay on longer than a year, so you only have fixed-term leases, it happens.

Good point thebandicoot I hadn't considered that!

Grandpa Hassan

I was in the same position OP. But I've kept mine. It's part of my retirement....either throwing off an income by the time I'm 55, or else an unencumbered asset. No way I can get in the property ladder in London without family money, and I wouldn't have the discipline to invest. So the cost....the odd month without rent, the occasional refurbs, property tax etc....are effectively part of my investment for the future. Worth considering as part of your decision

Mrs OBumble

I have an apartment like that (in another country while I live here).

With a professional property manager in place, being a landlord is no hassle at all. (FWIW, I pay 11% of rent to them, but it's well worth it for the level of service they provide - and this is tax-deductable.) Make sure you get one that specialises in rental property manageement, not an EA who does rentals on the side.

How much tax you owe will depend on your taxable income: I'm paying a lot (soon to be 52% once PRSI applies to non-earned income, less the amount of tax I pay on it at home). But it's not only about money, it's also about retirement strategy, cashflow, connection with home, having an income stream there (which also covers the cost of my PO Box there and my storage unit). And the sheer amount that I would lose in CGT if I sold there

And as for the comment that it may not be available to you when you come home ... welll doh! Of course I will be planning my eventual return home to fit around lease-expiry dates if the plan it to move into it!

If you sold now, would you make on the deal even after the stamp duty and the sale and purchase costs (laywers etc). If not, then I'd say hold on to it - subject to proper tax advice of course.

DMG1983

Mrs OBumble wrote: »

I have an apartment like that (in another country while I live here).

With a professional property manager in place, being a landlord is no hassle at all. (FWIW, I pay 11% of rent to them, but it's well worth it for the level of service they provide - and this is tax-deductable.) Make sure you get one that specialises in rental property manageement, not an EA who does rentals on the side.

How much tax you owe will depend on your taxable income: I'm paying a lot (soon to be 52% once PRSI applies to non-earned income, less the amount of tax I pay on it at home). But it's not only about money, it's also about retirement strategy, cashflow, connection with home, having an income stream there (which also covers the cost of my PO Box there and my storage unit). And the sheer amount that I would lose in CGT if I sold there

And as for the comment that it may not be available to you when you come home ... welll doh! Of course I will be planning my eventual return home to fit around lease-expiry dates if the plan it to move into it!

If you sold now, would you make on the deal even after the stamp duty and the sale and purchase costs (laywers etc). If not, then I'd say hold on to it - subject to proper tax advice of course.

Thank you for the advice, I will spend some time weighing the pros and cons and consult with a tax expert so I don't get any nice surprises down the line!!
I appreciate your help!

Victor

D3PO wrote: »

Why the hell does everybody come on here with this mentality.

No need to be quite so forthright.

Moderator

Grandpa Hassan

Mrs OBumble wrote: »

I have an apartment like that (in another country while I live here).

With a professional property manager in place, being a landlord is no hassle at all. (FWIW, I pay 11% of rent to them, but it's well worth it for the level of service they provide - and this is tax-deductable.) Make sure you get one that specialises in rental property manageement, not an EA who does rentals on the side.

How much tax you owe will depend on your taxable income: I'm paying a lot (soon to be 52% once PRSI applies to non-earned income, less the amount of tax I pay on it at home). But it's not only about money, it's also about retirement strategy, cashflow, connection with home, having an income stream there (which also covers the cost of my PO Box there and my storage unit). And the sheer amount that I would lose in CGT if I sold there

This is the one aspect of it in Ireland which is pretty easy, OP. Flat 20% for overseas LLs, irrespective of the marginal tax rate you pay in the country that you live. That is not as big a hit as it might otherwise be, and makes being an overseas LL perfectly manageable

Mrs OBumble

But remember that when you become tax-resident in another country, you have to consider what tax they might charge you on overseas (ie Irish) income, too.

SuperS54

Isn't it the tenants responsibility to ensure the 20% tax is paid in the event of the landlord living overseas?

D3PO

DMG1983 wrote: »

I I realise I will have to pay tax on the profit made from the rent received minus my mortgage repayments.
!

you don't realize anything., Your mortgage repayments aren't deductible only 75% of interest is. God almighty.

D3PO

DMG1983 wrote: »

D3PO the rent will easily cover the mortgage, the fees, the insurance and all other associated costs involved so there is no need to be so condescending.
.

there is a reason to be condescending. You have shown in the thread you have no idea what you are talking about. You don't even know what tax deductible but think you can "cover your mortgage"

before you go thinking about your options you should learn all about being a landlord because as it stands its fair to say you would be nothing more than an amateur.

Dr Turk Turkelton

D3PO wrote: »

you don't realize anything., Your mortgage repayments aren't deductible only 75% of interest is. God almighty. :rolleyes::rolleyes:

This has already being stated and the op has acknowledged it.
Perhaps read the thread before commenting in future?and rolling your eyes.

Grandpa Hassan

SuperS54 wrote: »

Isn't it the tenants responsibility to ensure the 20% tax is paid in the event of the landlord living overseas?

Theoretically. But I would like to see the authorities claim backdated payments or try to take a tenant to court for not doing this. There would be uproar. It is completely unworkable

SuperS54

My feelings are the same, it seems completely unworkable ~ the tenant could simply state that they were unaware the LL was non-resident for tax purposes. It also doesn't seem particularly fair that this is the tenants responsibility anyway...

Dori_dormer ~ if you don't mind, can you supply some more details on how you were hit with a tax bill?" Particularly in relation to the fact that it is apparently the tenants responsibility to deduct the 20% and submit it to revenue.

djimi

Grandpa Hassan wrote: »

Theoretically. But I would like to see the authorities claim backdated payments or try to take a tenant to court for not doing this. There would be uproar. It is completely unworkable

It also only applies where rent is paid directly to the landlord. The OP is talking about using a letting agent to manage the tenancy, so the 20% deduction from the rent would not apply, assuming the tenant pays rent to the agent rather than the landlord.

djimi

D3PO wrote: »

there is a reason to be condescending. You have shown in the thread you have no idea what you are talking about. You don't even know what tax deductible but think you can "cover your mortgage"

In fairness rents in the Gasworks currently range upwards of €2200-€2500 a month. We have no idea how much of a mortgage the OP has, so whether or not the rent (even taking tax and deductions into account) will cover the mortgage is not really something that we are in a position to speculate about. Its entirely possible that a rent that high will cover any costs.

Scortho

djimi wrote: »

In fairness rents in the Gasworks currently range upwards of €2200-€2500 a month. We have no idea how much of a mortgage the OP has, so whether or not the rent (even taking tax and deductions into account) will cover the mortgage is not really something that we are in a position to speculate about. Its entirely possible that a rent that high will cover any costs.

It is plausible, but you can't deny the fact that d3po is right that the op hasn't a clue about being a landlord.
There's a lot more fees to be met than just the mortgage payment.

Best thing for the op to do is to do a spreadsheet of rent vs total costs and post her up so we can pick holes in it.

While I'd keep it (mainly because even if the rent didn't cover the mortgage, it's a good way of providing for your pension if you don't find pension plans attractive.)
I know I'd choose an apartment that covers most of the rent than paying into a pension that might be worth feck all in 40 years time.
At least the apartment would continue to pay a good rent as there'll always be demand for city centre.

However I wouldn't be looking at it as rent is x, mortgage is less than x therefore profit.