Sell and invest or continue to let

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    Sell and invest or continue to let

    Hello. I lived in my property from 1996 to 2003 and it has been let since then to various tenants. The last tenant has been in the property 7 years. She is leaving this week and I am unsure whether to relet or sell. I bought the house for 52,500 and it’s now worth c. £210000. It has been let at £695 and is fully managed as I don’t live locally any more. I’ve just got a new job and I’m now in the 40% tax band. I calculate I will need to pay about £26000 in CGT if I sell now. I would want to invest the money- as my partner and I plan to use the income to help fund retirement in around 10 years time. It sounds like CGT is only going to go up so I’m concerned that if I continue to let, any gain I make over 10 years will end up being used to pay tax. On the other hand, if I sell now, savings rates are appalling. Any thoughts ( I know there is no right answer,).

    #2
    If the property is worth £210,000, the rent should probably be significantly more than £695 now.
    And the place probably needs some refreshing.

    There isn't a right answer, but those are things you should probably factor in.

    No one knows what will happen with CGT, so it's essentially a guess.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Thanks. Properties in the area are let now at £725-£750 but are on the market for £230000. The agent told me it didn’t need work prior to readvertising but I’ve set aside money for redecorating. I probably need to weigh up the advantages and disadvantages before letting out again. Thanks for your response

      Comment


        #4
        yields are lower in the south east than oop north

        Comment


          #5
          Yes , The rental yield is low. I agree you should switch to another property with higher rent. .

          Comment


            #6
            Guess it depends on your needs and wants. Seems like you’ve had a decent time letting it so perhaps let sleeping dogs lie. Make some rental profit and don’t forget that CGT is not going to be 100% so say you make an additional £100,000 in capital growth over the next 10 years even if CGT rises to say 40% then allowing for the additional from today’s rates on the current value you are still going to make an additional say £50,000 if selling them.

            more clearly if the CGT rate doesn’t increase very much. If it increases at all.

            Comment


              #7
              Why not just leave the current setup, let out to a new person, and don't increase the rent too much - the goal is to reduce/eradicate voids.

              Once this is in place then use any "spare" cash each month to feed your ISA..... after that throw is all in a SIPP. Get the government to top up and you can also top up, if still a higher tax payer, on your self assessment form. I have setup a JISA with Nutmeg, fully managed and am achieving 14% without lifting a finger. I'm sure SIPPs wil lbe able to match or beat that, even tracking the S&P should give a decent return over 10 years.

              Finally once you take the money out after 10 years, you have zero tax on the ISA and low rates for rthe SIPP as I'm assuming you will not have any main salary to push you into a higher rate.

              Spend the 10 years moving funds from growth to income and all will be good!!!

              I have nothing against buying another property but sometimes I feel Mr Sunak will be out to reclaim his billions from someone ... and I bet landlords will be easy target..

              good luck


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