Hello everyone,
I need some help and advice and hope to get a few suggestions on how to proceed.
In 2010, we bought an end-terrace house in northern Berlin in a very desirable location (120 sqm (1,292 sq ft) living space, 250 sqm (2,691 sq ft) garden, 3 floors, parking space, excellent infrastructure) at a very favorable price (bankruptcy sale).
This house is now to be sold for a new construction project, as private circumstances have changed and the house no longer meets many of our new requirements.
What is the best way to proceed here?
How can one coordinate the sale of the current house with the new project?
What options are there to handle this financially in the smartest way possible?
What risks should be considered?
What does a term like “property swap” mean in this context?
There is still an outstanding loan on our current house of about €98,000.
According to our research, the market value is around €200,000. Is it correct to assume that €200,000 sale proceeds minus €98,000 remaining loan and prepayment penalty equals my net profit?
The property has been continuously owner-occupied by us (so no capital gains tax to consider?).
Regarding the new construction project
We have clear ideas about the new house and have set a maximum budget of €350,000 for all related costs.
We have a net monthly income of €4,700, which I believe is above average. Are these assumptions realistic?
It would be great to receive some guidance or suggestions here.
I need some help and advice and hope to get a few suggestions on how to proceed.
In 2010, we bought an end-terrace house in northern Berlin in a very desirable location (120 sqm (1,292 sq ft) living space, 250 sqm (2,691 sq ft) garden, 3 floors, parking space, excellent infrastructure) at a very favorable price (bankruptcy sale).
This house is now to be sold for a new construction project, as private circumstances have changed and the house no longer meets many of our new requirements.
What is the best way to proceed here?
How can one coordinate the sale of the current house with the new project?
What options are there to handle this financially in the smartest way possible?
What risks should be considered?
What does a term like “property swap” mean in this context?
There is still an outstanding loan on our current house of about €98,000.
According to our research, the market value is around €200,000. Is it correct to assume that €200,000 sale proceeds minus €98,000 remaining loan and prepayment penalty equals my net profit?
The property has been continuously owner-occupied by us (so no capital gains tax to consider?).
Regarding the new construction project
We have clear ideas about the new house and have set a maximum budget of €350,000 for all related costs.
We have a net monthly income of €4,700, which I believe is above average. Are these assumptions realistic?
It would be great to receive some guidance or suggestions here.
P
Polle 19677 Jan 2015 14:28Hello, we had the same problem last year. Our house, built in 1998, was inspected by an expert commissioned by the buyer.
We also still had an outstanding loan, which the buyer wanted to take over. A well-known notary advised us against this. So, we paid off the loan early, although with prepayment penalties. Since our previous interest rate was 4.6% and the new financing was at 1.9%, we decided on this option (our main bank offered us by far the worst deal, so don’t rely solely on your main bank).
We handled the handover of the house as follows: we accommodated the buyer on the price, as they will not live in the house themselves but will use it as a rental property. We arranged that from the purchase date, which was agreed upon in writing, we can continue living rent-free in the house for one year.
We also still had an outstanding loan, which the buyer wanted to take over. A well-known notary advised us against this. So, we paid off the loan early, although with prepayment penalties. Since our previous interest rate was 4.6% and the new financing was at 1.9%, we decided on this option (our main bank offered us by far the worst deal, so don’t rely solely on your main bank).
We handled the handover of the house as follows: we accommodated the buyer on the price, as they will not live in the house themselves but will use it as a rental property. We arranged that from the purchase date, which was agreed upon in writing, we can continue living rent-free in the house for one year.
Hello,
could someone please explain the options for a "bridge loan" in more detail? I mean when my own capital is still tied up in the property that hasn’t been sold yet.
Are there possibilities to keep the house and rent it out while somehow using it as leverage in the new project?
Thanks
could someone please explain the options for a "bridge loan" in more detail? I mean when my own capital is still tied up in the property that hasn’t been sold yet.
Are there possibilities to keep the house and rent it out while somehow using it as leverage in the new project?
Thanks
Regarding the sale price: Have you lived in and used the property exclusively yourself?
If not, capital gains tax may apply (exceptions are listed below):
If not, capital gains tax may apply (exceptions are listed below):
- the property was used exclusively by you for your own purposes during the entire period between purchase and sale, or
- it was used exclusively by you for your own purposes at least in the year of sale and the two preceding years.
Wastl schrieb:
Regarding the sale price: Have you lived in and used the property exclusively yourself?
If not, capital gains tax may apply (the exceptions are listed below):
- the property was used exclusively by yourself throughout the entire period between purchase and sale, or
- at least during the year of sale and the two preceding years, it was used exclusively by yourself.
Yes, I have lived in it myself since the purchase in 2010 and will continue to do so until the sale.
N
nordanney8 Jan 2015 09:07ductom81 schrieb:
Hi,
can someone please explain in more detail the options for a "bridge loan"? I mean when my equity is still tied up in a property that hasn’t been sold yet.
Are there ways to keep the house, rent it out, and still somehow use it as an advantage in the new project?
Thanks 1. Bridge loan: You receive a loan equivalent to your (expected) profit. This loan has a short term, for example one year, and is not repaid during this period. The loan is paid back at the end of the term with the proceeds or profit from the sale. It acts as a pre-financing or interim financing for your current equity tied up in the property.
2. House as an advantage: You use the rented-out house (which increases your income) as collateral for the bank financing your new home. This way, you can get a higher loan amount than if you only mortgaged the new house and contributed cash (which also increases the total monthly payments). Depending on your rental income and the loan interest rate, this can also be tax advantageous. However, it is best to discuss this with a tax advisor (for example, possible splitting of the loans and allocation to the rented property).