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Investment property implications

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  • 29-01-2014 3:01pm
    #1
    Idbatterim
    Registered Users Posts: 17,852 ✭✭✭✭


    hey guys, what are potential implications for someone currently renting, buying an investment property outright in cash, bearing in mind, this person is also in the market to purchase a long term family home?


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    #2
    Bigcheeze
    Closed Accounts Posts: 2,858 ✭✭✭Bigcheeze


    The most obvious implication is that if you buy the investment for cash and mortgage the home you're not getting a tax deduction for mortgage interest.

    It would seem you should mortgage the investment property and pay cash for the home.


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    #3
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    yep big cheese has hit it in one.

    the obvious is that if your not buying your house for cash having the BTL mortgage will potentially impact on your ability to get the PPR mortgage.


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    #4
    Mrs OBumble
    Registered Users Posts: 25,957 ✭✭✭✭Mrs OBumble


    If the cash is in the bank at the moment it will be earning interest that is taxed at 41%. Depending on your other income, the tax rate on the mortage income may be well less than this.


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    #5
    marathonic
    Registered Users Posts: 1,668 ✭✭✭marathonic


    Bigcheeze wrote: »
    It would seem you should mortgage the investment property and pay cash for the home.

    Further to this, if you buy a PPR for cash, you can then secure a mortgage against it at residential mortgage rates (about 1% lower than BTL rates). Provided you use these funds to buy the BTL property, you can still get a tax deduction for mortgage interest.

    This is the most low cost, tax efficient way to do it.


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    #6
    Idbatterim
    Registered Users Posts: 17,852 ✭✭✭✭Idbatterim


    thanks for the excellent advice guys! say you buy the investment property, do it up, flip it, am I right in saying you wouldnt have to pay capital gains, as you dont own a PPR. but you would have to pay income tax on it?


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    #7
    MouseTail
    Registered Users Posts: 1,663 ✭✭✭MouseTail


    Idbatterim wrote: »
    thanks for the excellent advice guys! say you buy the investment property, do it up, flip it, am I right in saying you wouldnt have to pay capital gains, as you dont own a PPR. but you would have to pay income tax on it?

    no, you still have to pay cgt if it is not your PPR and you keep it for less than 7 years.


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    #8
    SeanSouth
    Registered Users Posts: 261 ✭✭SeanSouth


    post cancelled


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    #9
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    marathonic wrote: »
    Further to this, if you buy a PPR for cash, you can then secure a mortgage against it at residential mortgage rates (about 1% lower than BTL rates). Provided you use these funds to buy the BTL property, you can still get a tax deduction for mortgage interest.

    This is the most low cost, tax efficient way to do it.

    Interesting wasn't aware you could do that. Always thought the mortgage had to be secured against the rental for mortgage interest tax deduction to be live.


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    #10
    No Pants
    Closed Accounts Posts: 3,347 ✭✭✭No Pants


    Are there any First Time Buyer consequences from making his purchases (PPR and BTL) in any particular order?


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    #11
    The_Conductor
    Moderators, Society & Culture Moderators Posts: 32,285 Mod ✭✭✭✭The_Conductor


    No Pants wrote: »
    Are there any First Time Buyer consequences from making his purchases (PPR and BTL) in any particular order?

    No.
    There are no First Time Buyer incentives at present.
    Previously (up to 31.12.13) you got a waiver on your LPT until 2016- however this is now finished.


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    #12
    pitrn
    Registered Users Posts: 93 ✭✭pitrn


    HI, Looking to buy a property in Dublin and renting it out. Any advice on where to buy, how to let- IS landlord insurance needed?


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