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Current Mortgage Hoping to Self-Build

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  • 05-04-2018 11:19am
    #1
    rwalshie
    Registered Users Posts: 38 ✭


    Hi All, just wondering what way you would approach this situation or if anyone has been in a similar one that could give advice. Have a current mortgage of €198K which I reckon from local housing prices is probably in negative equity of about 40 to 50K, house is located in a busy town with very good rental potential, mortgage is in my hubbie's name. We are looking to self-build in the countryside and have been gifted a site, we've drawn up plans for a house with estimated cost of €200K and planning permission has been granted. We have 50K in savings towards a new mortgage and really would like to hold onto the current house as due to its location and shortage of housing in the area feel it would definitely pay for itself in rental. How would you approach this?


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    #2
    bee06
    Registered Users Posts: 4,514 ✭✭✭bee06


    I was in a similar situation. I rent out the apartment and we got a mortgage to build the house. If I remember correctly for AIB we had to show we could pay both mortgages as stress tested interest rates. Each bank has different rules about whether they take rental income into account. Don’t forget to do the maths on taxes due on your rental income. I’m actually making a loss when taxes are taken into account.


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    #3
    rwalshie
    Registered Users Posts: 38 ✭rwalshie


    bee06 wrote: »
    I was in a similar situation. I rent out the apartment and we got a mortgage to build the house. If I remember correctly for AIB we had to show we could pay both mortgages as stress tested interest rates. Each bank has different rules about whether they take rental income into account. Don’t forget to do the maths on taxes due on your rental income. I’m actually making a loss when taxes are taken into account.

    Thanks bee do you know what is the cut off allowed before you are taxed, I was under the impression that if the rental was just covering the mortgage then it wouldn't be subject to tax?


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    #4
    bee06
    Registered Users Posts: 4,514 ✭✭✭bee06


    rwalshie wrote: »
    Thanks bee do you know what is the cut off allowed before you are taxed, I was under the impression that if the rental was just covering the mortgage then it wouldn't be subject to tax?

    No, that’s no the case. Rental income is fully taxable but there are some allowable expenses. The below link goes through everything.

    https://www.revenue.ie/en/property/rental-income/irish-rental-income/index.aspx


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    #5
    rwalshie
    Registered Users Posts: 38 ✭rwalshie


    bee06 wrote: »
    No, that’s no the case. Rental income is fully taxable but there are some allowable expenses. The below link goes through everything.

    https://www.revenue.ie/en/property/rental-income/irish-rental-income/index.aspx

    Thanks a mil bee.


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