Sell my Airbnb flat and stick funds in savings account?
Discussion
I own two properties, both outright it’s . One is our main home and the other is an investment property that I let out on an Airbnb basis.
The rental property does okay, and on average I make around £1500 a month. I just can’t help but think that with the uncertainty in the market and the fact that inevitably things break, people cancel, and the risk of having the flat trashed which hasn’t happened yet **touchwood** I would perhaps rather sell the property and have a hassle free monthly sum in the form of interest in a savings account.
I’ve seen interest rates of up to 5% if locked away for around a year. Should I do it or should I stick to what I’ve got?
Thanks for your input!
The rental property does okay, and on average I make around £1500 a month. I just can’t help but think that with the uncertainty in the market and the fact that inevitably things break, people cancel, and the risk of having the flat trashed which hasn’t happened yet **touchwood** I would perhaps rather sell the property and have a hassle free monthly sum in the form of interest in a savings account.
I’ve seen interest rates of up to 5% if locked away for around a year. Should I do it or should I stick to what I’ve got?
Thanks for your input!
Leicesterdave said:
I own two properties, both outright it’s . One is our main home and the other is an investment property that I let out on an Airbnb basis.
The rental property does okay, and on average I make around £1500 a month. I just can’t help but think that with the uncertainty in the market and the fact that inevitably things break, people cancel, and the risk of having the flat trashed which hasn’t happened yet **touchwood** I would perhaps rather sell the property and have a hassle free monthly sum in the form of interest in a savings account.
I’ve seen interest rates of up to 5% if locked away for around a year. Should I do it or should I stick to what I’ve got?
Thanks for your input!
Is that £1,500 gross or net? (I mean after expenses have bene taken into account). What's the value of the property/what kind of yield are you getting? Don't forget the capital appreciation as well.The rental property does okay, and on average I make around £1500 a month. I just can’t help but think that with the uncertainty in the market and the fact that inevitably things break, people cancel, and the risk of having the flat trashed which hasn’t happened yet **touchwood** I would perhaps rather sell the property and have a hassle free monthly sum in the form of interest in a savings account.
I’ve seen interest rates of up to 5% if locked away for around a year. Should I do it or should I stick to what I’ve got?
Thanks for your input!
In my experience you should be getting 5% net yield from your investment property, and that's not including capital gains 9which have been stratospheric over the last few years). With Airbnb you also don't have the issue of ono-paying tenants (although you probably have more of an admin hassle).
Since you've already got the property, and it's working ok, I'd suggest sticking with it. Whilst interest rates might be 5% now I don't think they'll stay at 5% in the long term.
Countdown said:
Is that £1,500 gross or net? (I mean after expenses have bene taken into account). What's the value of the property/what kind of yield are you getting? Don't forget the capital appreciation as well.
In my experience you should be getting 5% net yield from your investment property, and that's not including capital gains 9which have been stratospheric over the last few years). With Airbnb you also don't have the issue of ono-paying tenants (although you probably have more of an admin hassle).
Since you've already got the property, and it's working ok, I'd suggest sticking with it. Whilst interest rates might be 5% now I don't think they'll stay at 5% in the long term.
£1,500 net. It was valued at £270,000 a few months back but let’s not forget that things have turned a lot since.In my experience you should be getting 5% net yield from your investment property, and that's not including capital gains 9which have been stratospheric over the last few years). With Airbnb you also don't have the issue of ono-paying tenants (although you probably have more of an admin hassle).
Since you've already got the property, and it's working ok, I'd suggest sticking with it. Whilst interest rates might be 5% now I don't think they'll stay at 5% in the long term.
Bought it for £190k in 2018.
I guess it does do ok- I have the wishful thinking of getting less interest in a savings account but with no hassle whatsoever. However it is true that 5% interest could change rapidly also.
Can’t win!
What did you do OP ?
Our AirBnB always "looks quiet" at this time of year and picks up, so nothing to worry about.
But this year? I am definitely sensing that there are issues in the market.
I too am looking to get out / cash in / take the CGT hit and put it in the bank. (plus other complications, see my other topic : https://www.pistonheads.com/gassing/topic.asp?h=0&...
DId you sell up? and how about sorting any bookings you had in place?
Our AirBnB always "looks quiet" at this time of year and picks up, so nothing to worry about.
But this year? I am definitely sensing that there are issues in the market.
I too am looking to get out / cash in / take the CGT hit and put it in the bank. (plus other complications, see my other topic : https://www.pistonheads.com/gassing/topic.asp?h=0&...
DId you sell up? and how about sorting any bookings you had in place?
Eric Mc said:
Is your Air B&B property currently declared to HMRC as a "Holiday Let" or as a simple "Rental Property"?
Be aware that the very big Capital Gains concessions available on the sale of a bona fide holiday let are ending on 5 April.
thank you Eric, Any link to that would be great research for meBe aware that the very big Capital Gains concessions available on the sale of a bona fide holiday let are ending on 5 April.
PushedDover said:
Eric Mc said:
Is your Air B&B property currently declared to HMRC as a "Holiday Let" or as a simple "Rental Property"?
Be aware that the very big Capital Gains concessions available on the sale of a bona fide holiday let are ending on 5 April.
thank you Eric, Any link to that would be great research for meBe aware that the very big Capital Gains concessions available on the sale of a bona fide holiday let are ending on 5 April.
) Up until 5 April 2025, furnished holiday lets have been treated by HMRC as a form of trading business. C onsequently, some of the atributes of running a business have been applicable to running a holiday let.
Examples are -
Ability to claim certain Capital Allowances
Ability to claim full tax relief against profits on loan interest and oher finance charges
And the really big bonus - the ability to claim Business Asset Disposal Relief (what used to be called Entrepreneur's Relief) on any capital gains when the holiday let was sold i.e. a charge of just 10% on the taxable gain
From 6 April 2025 these rules will no longer apply and holiday let tax will be identical to what currently applies to buy to lets -
Restricted Capital Allowances
Restricted relief on interest and finance charges
Capital Gains tax treatment will be the same as for a normal Buy to Let i.e. higher CGT rates and no Business Asset Disposal Relief
Examples are -
Ability to claim certain Capital Allowances
Ability to claim full tax relief against profits on loan interest and oher finance charges
And the really big bonus - the ability to claim Business Asset Disposal Relief (what used to be called Entrepreneur's Relief) on any capital gains when the holiday let was sold i.e. a charge of just 10% on the taxable gain
From 6 April 2025 these rules will no longer apply and holiday let tax will be identical to what currently applies to buy to lets -
Restricted Capital Allowances
Restricted relief on interest and finance charges
Capital Gains tax treatment will be the same as for a normal Buy to Let i.e. higher CGT rates and no Business Asset Disposal Relief
Eric Mc said:
Up until 5 April 2025, furnished holiday lets have been treated by HMRC as a form of trading business. C onsequently, some of the atributes of running a business have been applicable to running a holiday let.
Examples are -
Ability to claim certain Capital Allowances
Ability to claim full tax relief against profits on loan interest and oher finance charges
And the really big bonus - the ability to claim Business Asset Disposal Relief (what used to be called Entrepreneur's Relief) on any capital gains when the holiday let was sold i.e. a charge of just 10% on the taxable gain
From 6 April 2025 these rules will no longer apply and holiday let tax will be identical to what currently applies to buy to lets -
Restricted Capital Allowances
Restricted relief on interest and finance charges
Capital Gains tax treatment will be the same as for a normal Buy to Let i.e. higher CGT rates and no Business Asset Disposal Relief
Again - thank you for the translation :-) Examples are -
Ability to claim certain Capital Allowances
Ability to claim full tax relief against profits on loan interest and oher finance charges
And the really big bonus - the ability to claim Business Asset Disposal Relief (what used to be called Entrepreneur's Relief) on any capital gains when the holiday let was sold i.e. a charge of just 10% on the taxable gain
From 6 April 2025 these rules will no longer apply and holiday let tax will be identical to what currently applies to buy to lets -
Restricted Capital Allowances
Restricted relief on interest and finance charges
Capital Gains tax treatment will be the same as for a normal Buy to Let i.e. higher CGT rates and no Business Asset Disposal Relief
Leicesterdave said:
£1,500 net. It was valued at £270,000 a few months back but let’s not forget that things have turned a lot since.
Bought it for £190k in 2018.
I guess it does do ok- I have the wishful thinking of getting less interest in a savings account but with no hassle whatsoever. However it is true that 5% interest could change rapidly also.
Can’t win!
If you don’t need to money/cash flow may be worth seeking a financial advisor and investing it and forgetting about it for a while. Should get more than the 5% then Bought it for £190k in 2018.
I guess it does do ok- I have the wishful thinking of getting less interest in a savings account but with no hassle whatsoever. However it is true that 5% interest could change rapidly also.
Can’t win!
If the AirBNB is valued at £270K and it's making £1500 that's 6.7% NET, which I'd say is pretty good?
If the op sells and invests the "£270K AND it gets 5% Gross, less NET unless it's all in tax efficient wrappers. It will take 7 years to get it all into tax efficient wrappers using two allowances.
If the OP keeps the AirBNB, and keeps getting that sort of return, are they not getting a better NET yield and potentially capital growth?
EDIT: I've just realised the OP hasn't commented so we don't know what they did but I'd be interested to hear.
If the op sells and invests the "£270K AND it gets 5% Gross, less NET unless it's all in tax efficient wrappers. It will take 7 years to get it all into tax efficient wrappers using two allowances.
If the OP keeps the AirBNB, and keeps getting that sort of return, are they not getting a better NET yield and potentially capital growth?
EDIT: I've just realised the OP hasn't commented so we don't know what they did but I'd be interested to hear.
Edited by FriedMarsBar on Tuesday 14th January 12:14
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