Help with 2nd property purchase - sense check required!
Discussion
Afternoon all,
I'm looking for some advice or at least a sense check on my current thinking behind selling rather than keeping my current property in order to buy another jointly with partner.
I have a property currently which is valued at around £230k. £95k mortgage on repayment rather than interest only. The property is owned solely by me and is currently let out.
I want to buy another property with my partner who also owns their own home and intends to sell it (so intending to sell mine and theirs and club together essentially). As I see it, if I keep mine and buy the 2nd property jointly, I will have to pay double stamp duty to purchase the new joint property along with full capital gains tax if I were to sell mine at a later date. This currently would work out at an extra £15k stamp duty (on a £500k house) and the CGT bill currently around £29k from using the gov.uk calculator. If I keep the property obviously the CGT will go up in line with property prices/gain, therefore I would need to keep the property very long term in order for values to rise so that I could 'get back' the extra that I would pay in SDLT and CGT I would be liable to.
I can't see how keeping it makes much sense unless I am thinking very long term i.e. retirement age (i'm 33 currently). I am also not sure I would be able to remortgage it and take enough equity out in order to buy a significantly better joint property whilst also enabling monthly payments to be such that they would be covered by the rental income.
I currently pay lower rate tax and the rental covers itself in terms of cost/tax but I do not make anything from it monthly.
This is a situation many others must have found themselves in before therefore I am looking for opinions on what is best, or if i'm missing something entirely?
If selling both properties we would have a large deposit for the next place and a smaller mortgage, but still be investing in a property so it's not like its going to sit in the bank either.
Grateful for any insight or thoughts!
Cheers
I'm looking for some advice or at least a sense check on my current thinking behind selling rather than keeping my current property in order to buy another jointly with partner.
I have a property currently which is valued at around £230k. £95k mortgage on repayment rather than interest only. The property is owned solely by me and is currently let out.
I want to buy another property with my partner who also owns their own home and intends to sell it (so intending to sell mine and theirs and club together essentially). As I see it, if I keep mine and buy the 2nd property jointly, I will have to pay double stamp duty to purchase the new joint property along with full capital gains tax if I were to sell mine at a later date. This currently would work out at an extra £15k stamp duty (on a £500k house) and the CGT bill currently around £29k from using the gov.uk calculator. If I keep the property obviously the CGT will go up in line with property prices/gain, therefore I would need to keep the property very long term in order for values to rise so that I could 'get back' the extra that I would pay in SDLT and CGT I would be liable to.
I can't see how keeping it makes much sense unless I am thinking very long term i.e. retirement age (i'm 33 currently). I am also not sure I would be able to remortgage it and take enough equity out in order to buy a significantly better joint property whilst also enabling monthly payments to be such that they would be covered by the rental income.
I currently pay lower rate tax and the rental covers itself in terms of cost/tax but I do not make anything from it monthly.
This is a situation many others must have found themselves in before therefore I am looking for opinions on what is best, or if i'm missing something entirely?
If selling both properties we would have a large deposit for the next place and a smaller mortgage, but still be investing in a property so it's not like its going to sit in the bank either.
Grateful for any insight or thoughts!
Cheers
Edited by Willber on Tuesday 8th February 15:44
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