Income from investment
Discussion
A friend wants to do less, but have some income for retirement. Current investments amount to about £150k in a mixture of shares and cash. There is no strategy, aside from picking shares which he 'likes'. Sadly these likes have not always done that well...
My suggestion was to buy 3 BTL properties, each with a 75K mortgage. For that you would pay about £350/month for the mortgage and receive 550-600 in rent per property. Expenses and costs might come to a further £150/month/property using a mix of friends and contacts for any work, leaving you with £200-£400 at the end. I assume tax has to be paid on this, but how much? That way he could pay down the mortgage when he is working, then in 5 or 10 years when he stops, drop down to an interest only and have some cash in hand.
Is it also worth considering setting up a fund/company to manage the properties, effectively paying yourself a wage from the books? Is that more tax efficient than having them in your own name or not? Also, come time to pass things on if a son is also a director then the company continues, without having to pay 40% tax on the investments.
Finally, if the mortgage was in an individuals name, and the individual was say 55, would they lend over more than a 15 year term, and if not, does it make a difference if the investment is in a companies name?
My suggestion was to buy 3 BTL properties, each with a 75K mortgage. For that you would pay about £350/month for the mortgage and receive 550-600 in rent per property. Expenses and costs might come to a further £150/month/property using a mix of friends and contacts for any work, leaving you with £200-£400 at the end. I assume tax has to be paid on this, but how much? That way he could pay down the mortgage when he is working, then in 5 or 10 years when he stops, drop down to an interest only and have some cash in hand.
Is it also worth considering setting up a fund/company to manage the properties, effectively paying yourself a wage from the books? Is that more tax efficient than having them in your own name or not? Also, come time to pass things on if a son is also a director then the company continues, without having to pay 40% tax on the investments.
Finally, if the mortgage was in an individuals name, and the individual was say 55, would they lend over more than a 15 year term, and if not, does it make a difference if the investment is in a companies name?
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