Considering selling property - Page 2

wantone · #21 16.10.2020, 09:51

	Quote:	NewInZurichTown
	London houses especially big ones are lucky to get 3.5% return before costs. I have a close friend who is renting a 4 bed house in Clapham sw4 worth 1.5m and he is struggling to get 3k a month

There is a move out of London and in general big cities now due to Covid but London is special market as nearly everyone wants to rent small flats and larger flats or houses are not in demand.

In general real estate in London is overvalued by a huge factor but there is a very tight control in the supply that's why it didn't show up until now.

fatmanfilms · #22 16.10.2020, 10:23

	Quote:	wantone
	There is a move out of London and in general big cities now due to Covid but London is special market as nearly everyone wants to rent small flats and larger flats or houses are not in demand. In general real estate in London is overvalued by a huge factor but there is a very tight control in the supply that's why it didn't show up until now.

UK recent change in planning laws could make a huge difference, especially as a lot of smaller units will be built.
https://www.gov.uk/government/news/n...e-town-centres

AbFab · #23 16.10.2020, 11:04

	Quote:	eyebeebe
	Taxed at cantonal and/or communal level according to this link https://www.reichlinhess.ch/en/2020/...h-and-lucerne/ It may be different between cantons, but I‘m sure in Schwyz you have to buy again within the canton to defer the tax. I can‘t find the link right now unfortunately.

From https://www.vermoegenszentrum.ch/rat...nnsteuern.html

Translation below

	Quote:
	Aufgeschoben wird die Grundstückgewinnsteuer bei selbst genutzten Liegenschaften auch dann, wenn der Verkaufserlös "innert einer angemessenen Frist" in ein neues Eigenheim in der Schweiz investiert wird (so genannte Ersatzbeschaffung). Je nach Kanton dürfen höchstens zwei bis vier Jahre zwischen dem Verkauf der alten und dem Kauf der neuen Liegenschaft verstreichen.

Translation:

Property gains tax is also deferred for properties used by the owner if the sales proceeds are invested in a new home in Switzerland "within a reasonable period" (so-called replacement purchase). Depending on the canton, a maximum of two to four years may elapse between the sale of the old and the purchase of the new property.

GenevaSculler · #24 16.10.2020, 11:12

I would remortgage for as long as possible, locking in the ridiculously low current interest rates. I would also take out as much mortgage as the bank will give you to invest elsewhere - 1% annualized over 15 years is a fairly easy target to beat without too much risk.

The calculations will change depending on how much capital you have in the house and what the bank thinks it is worth, but my calculation would look like this:

House value: CHF 1,250,000
Current mortgage: CHF 750,000
Current equity: CHF 500,000
Current interest rate: 2%
Current return: CHF 44,000 - (CHF 750,000 x 2%) = CHF 29,000
Current yield (before costs): CHF 29,000 / CHF 500,000 = 5.8%

New mortgage: CHF 1,250,000 x 0.67 = CHF 837,500 (guessing that for a rented property the bank might give you 67% total mortgage?)
New mortgage interest rate, fixed for 15Y: 1.1%
New return: CHF 44,000 - (CHF 837,500 x 1.1%) = CHF 34,787
New yield: CHF 34,787 / CHF 412,500 = 8.4%

Plus you have CHF 87,500 extra cash to invest.

AbFab · #25 16.10.2020, 11:17

	Quote:	Phil_MCR
	Pros: Ability to roll over gain into recently purchased property Less admin and one less tax return to do Deleverage and raise cash Cons: Lose leveraged cash-flowing asset Property is in a lower taxed jurisdiction which currently helps with taxes

You omitted on 'cons' the agro of finding and dealing with tenants...

AbFab · #26 16.10.2020, 11:22

	Quote:	GenevaSculler
	I would remortgage for as long as possible, locking in the ridiculously low current interest rates. I would also take out as much mortgage as the bank will give you to invest elsewhere - 1% annualized over 15 years is a fairly easy target to beat without too much risk. The calculations will change depending on how much capital you have in the house and what the bank thinks it is worth, but my calculation would look like this: House value: CHF 1,250,000 Current mortgage: CHF 750,000 Current equity: CHF 500,000 Current interest rate: 2% Current return: CHF 44,000 - (CHF 750,000 x 2%) = CHF 29,000 Current yield (before costs): CHF 29,000 / CHF 500,000 = 5.8% New mortgage: CHF 1,250,000 x 0.67 = CHF 837,500 (guessing that for a rented property the bank might give you 67% total mortgage?) New mortgage interest rate, fixed for 15Y: 1.1% New return: CHF 44,000 - (CHF 837,500 x 1.1%) = CHF 34,787 New yield: CHF 34,787 / CHF 412,500 = 8.4% Plus you have CHF 87,500 extra cash to invest.

The fly in the ointment with a 15 year mortgage is if you need to break it before 15 years and the bank wants the pound of flesh...

HickvonFrick · #27 16.10.2020, 11:51

	Quote:	NewInZurichTown
	London houses especially big ones are lucky to get 3.5% return before costs. I have a close friend who is renting a 4 bed house in Clapham sw4 worth 1.5m and he is struggling to get 3k a month

My 1 bed flat just down the road in Wandsworth/Putney/Southfields gets 1200 and it's barely worth 300k.

There's just a lower return on big houses.

HickvonFrick · #28 16.10.2020, 12:02

	Quote:	AbFab
	The fly in the ointment with a 15 year mortgage is if you need to break it before 15 years and the bank wants the pound of flesh...

I've always got tracker mortgages for this very reason. At the shortest time period available to - so the complete opposite of getting a 15 year fixed..