As part of the fact finding review with our clients I often find out they have an investment property and they will ask for our opinion as to whether they should hold on to investment properties they’ve owned for a number of years or sell them to reduce debt or take out the equity.
Investment Portfolio: The old fashioned advice in Ireland was to invest in ‘bricks and mortar’. However, I always ask people to look at the investment in the full and work out the maths, also what percentage of your investment portfolio does this represent, you shouldn’t have it all invested in one asset class. What is the true return you are receiving and have prices topped out?
Tax-efficiency: Rental income from a personally held property is fully taxable at an individual’s marginal rate. This means that any rental income received from your tenant will be added to your other taxable income such as salary and bonuses.
Tax Bill: You can reduce your personal tax liability each year by making a personal pension contribution within the age-related limits.
Liquidity: Don’t under-estimate the benefits of liquidity when you own any asset that you hope will appreciate in value over time. Liquidity simply means that you can sell it and turn it into cash whenever you want at short notice. Obviously, property does not fall into this category.
The issue with an illiquid asset like property is not necessarily the price fluctuations when it suits you to sell, sometimes there simply is no price if there is no buyer for it. This caught many people out who wanted to retire during our property crash from 2008 onwards.
Property prices are high at the moment. It may be a good time to exit the market and with fund prices lower than 18 months ago, it could be a good time to sell and diversify your investments.
*I am selling my own property and I am using a property stager, I will post pics soon
