Sell up or rent out?

Sell up or rent out?

Author
Discussion

ch427

Original Poster:

8,857 posts

232 months

Friday 11th July 2014
quotequote all
Would appreciate any advise from people that may have been or are in a similar position.
Plan to move soon, present property is worth £140k with £38k left on the mortgage.
New property we are looking at is £230k.
Savings of around £40k.
Just wondered what others would do in my situation. Sell up and enjoy a comfortable living at an expensive time (marriage soon and maybe starting a family next year) or rent out and maybe not be as comfortable.
To rent my exisitng property out i would need to spend £7k on it to do some external repairs etc but could sell it as is. Rental income is estimated at £600 pcm.
With depostis on mortgages being so high these days im struggling to decide what to do!
Appreciate any advice.

Sarnie

8,025 posts

208 months

Friday 11th July 2014
quotequote all
Leverage the current residential on to a BTL product, releasing funds to pay for the Home Improvements and increase your deposit for your residential purchase, to bring down the LTV and rate payable.

No much point having a low LTV rental and then having a high rate on the biggest debt at circa £190k..... smile

ch427

Original Poster:

8,857 posts

232 months

Friday 11th July 2014
quotequote all
What sort of deposit do the best rates come at?

IanA2

2,762 posts

161 months

Friday 11th July 2014
quotequote all
How does CGT fit into this scenario?

ch427

Original Poster:

8,857 posts

232 months

Friday 11th July 2014
quotequote all
IanA2 said:
How does CGT fit into this scenario?
Not sure how to calculate this.

Sheepshanks

32,520 posts

118 months

Friday 11th July 2014
quotequote all
IanA2 said:
How does CGT fit into this scenario?
There isn't any CGT in this scenario.

nyt

1,803 posts

149 months

Friday 11th July 2014
quotequote all
if you do decide to rent then get the property (generously) valued and keep the paperwork
This will help when you encounter CGT when you eventually sell


IanA2

2,762 posts

161 months

Friday 11th July 2014
quotequote all
Sheepshanks said:
IanA2 said:
How does CGT fit into this scenario?
There isn't any CGT in this scenario.
How comes? Two properties, one as domicile, surely the sale of one attracts CGT? Genuine enquiry as I have been advised (in a similar situation) that one property is liable.

The Boy Lard

461 posts

222 months

Friday 11th July 2014
quotequote all
Big CGT would only hit if you sold 2nd property?

If you balance Mortgage vs Rental Income + Expenses on second property then you can keep it below the tax threshold too.

Sarnie

8,025 posts

208 months

Friday 11th July 2014
quotequote all
ch427 said:
What sort of deposit do the best rates come at?
You can take the current property to 75% LTV to add to your new purchase deposit. The best residential rates are 60% and below really.......

Sheepshanks

32,520 posts

118 months

Friday 11th July 2014
quotequote all
IanA2 said:
How comes? Two properties, one as domicile, surely the sale of one attracts CGT? Genuine enquiry as I have been advised (in a similar situation) that one property is liable.
It's only liable when you sell. In the scenario the OP proposed his alternatives where to sell now or keep and rent. He didn't mention renting and then selling.

Anyway, in isolation on the house in question it would be small beer and might even be covered by reliefs.

gibbon

2,182 posts

206 months

Friday 11th July 2014
quotequote all
You have a period of 18 months from when the property is rented where you are exempt from any capital gains tax, you also have up to £40k renters relief anyway, and only pay capital gains on the increase during the period you rent it out.

On this property, I doubt there would be any tax to pay (apart from income tax of course) in even the medium term future.

Jockman

17,912 posts

159 months

Friday 11th July 2014
quotequote all
Sheepshanks said:
Anyway, in isolation on the house in question it would be small beer and might even be covered by reliefs.
Correct - a rental house that has previously been a primary residence ?? You would be unlucky to pay ANY CGT smile

Sheepshanks

32,520 posts

118 months

Friday 11th July 2014
quotequote all
Jockman said:
You would be unlucky to pay ANY CGT smile
Or lucky. wink

Sometimes having to pay tax is good. smile

Jockman

17,912 posts

159 months

Friday 11th July 2014
quotequote all
Sheepshanks said:
Or lucky. wink

Sometimes tax is good. smile
Indeed.

Ensure soon-to-be wifey is on the deeds as a Tenant in Common. Might as well have her allowance just in case.

Sometimes marriage is good smile

gibbon

2,182 posts

206 months

Friday 11th July 2014
quotequote all
Jockman said:
Correct - a rental house that has previously been a primary residence ?? You would be unlucky to pay ANY CGT smile
How so?

I recently did this and am resigned to the fact that if I ever have to sell the rental property (that was my home for four years) I will be paying some tax.

IanA2

2,762 posts

161 months

Friday 11th July 2014
quotequote all
Our situation is that we are drastically downsizing. We're buying a small flat which costs less than ten percent of the value of our current house. My understanding is that we need to sell our current house within a year of buying the flat or get stuffed for CGT on our current property.

Plan is to buy/rent something in the sun and live just live here part of the year.

ETA: We've had our current house 10 years, what would be the relief on that? Anybody got a rough idea?

Edited by IanA2 on Friday 11th July 13:52

Jockman

17,912 posts

159 months

Friday 11th July 2014
quotequote all
gibbon said:
How so?

I recently did this and am resigned to the fact that if I ever have to sell the rental property (that was my home for four years) I will be paying some tax.
Ever heard of Lettings Relief ??

http://www.thisismoney.co.uk/money/mortgageshome/a...

Your better half has allowances too.

gibbon

2,182 posts

206 months

Friday 11th July 2014
quotequote all
IanA2 said:
Our situation is that we are drastically downsizing. We're buying a small flat which costs less than ten percent of the value of our current house. My understanding is that we need to sell our current house within a year of buying the flat or get stuffed for CGT on our current property.

Plan is to buy/rent something in the sun and live just live here part of the year.

ETA: We've had our current house 10 years, what would be the relief on that? Anybody got a rough idea?

Edited by IanA2 on Friday 11th July 13:52
You have a period of 18 months from when the property is rented where you are exempt from any capital gains tax, you also have up to £40k renters relief anyway, and only pay capital gains on the increase during the period you rent it out.

gibbon

2,182 posts

206 months

Friday 11th July 2014
quotequote all
Jockman said:
Ever heard of Lettings Relief ??

http://www.thisismoney.co.uk/money/mortgageshome/a...

Your better half has allowances too.
If you read above, you will see I have, unless I've missed something else. £40k per person no? Just making sure im not missing a trick.

Edited by gibbon on Friday 11th July 13:57