KEY POINTS:
Q: We're going overseas for a year, maybe more, and considering whether we should sell our Mt Albert house. What is the housing market going to do? Some say now is the peak of the market and waiting a year would be foolish. On the other hand we do not have a big mortgage, so renting it out would more than cover our payments but we understand we would have to pay tax on the rental income. Also, we don't really want to rent when we come home.
A: Glenda Whitehead, Auckland manager of Quotable Value, replies: A year ago I would not have thought the market would would have increased to where it is today. A year from now, who knows? What you need to balance, in part, is your propensity for risk.
Mt Albert is a good, traditional, residential area and its properties have performed well in the past. Your low mortgage reduces a risk associated with ownership.
With the right property manager in your absence, you could get a quality tenant and a good financial return. If you hold and the market does increase, you also get capital gain. Selling would have its costs, but term deposit interest rates are good at present. If you pick the right bank your money will be secure.
Don't worry about paying tax - it means you are making money. Either way, holding the house or putting the money in the bank, you will have to pay tax. Does the house meet your needs now, and if you return from overseas in a year is it likely to still meet your needs - both in terms of actual home and area? If you don't return - will having money in the bank make life easier? If it was me, I would be reluctant to sell now and step out of the market, and potentially have to get back in, in a year's time. The sell/buy process could cost you up to $20,000. Also, it could be an unsettling feeling if you were to come back to NZ but have no base.
