All change... Plan number 2...

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    All change... Plan number 2...

    So the previous flat sold before I could get my hands on it.

    So another quick plan for your collective scrutiny please. Don't know how feasible it is.

    We're moving to new build in march with new mortgage and savings. New build purchase not dependant on current residential sale.

    Current residential worth 400k with 300k mortgage. Consent to lease already obtained on this mortgage as a temporary measure to give options. (Sell or rent out)

    How viable would it be to keep the current residential home in our names, (or better just in my wife's name as she is a lower rate tax payer) and take out a buy to let mortgage and rent it out long term?

    Would we still be liable for the enhanced 3% stamp duty on the new build as the current residential is no longer a residence to us or would I need to sell the current residential into a new ltd company to get the sdlt benefit? I'm aware then of possible CGT issues as the house was bought for 242k in 2010.

    All suggestions welcome as top would be an appropriate tax advisor I could contact to discuss the intricacies of anyone could recommend someone?

    Thanks in anticipation

    #2
    Originally posted by Bonehead33 View Post
    Would we still be liable for the enhanced 3% stamp duty on the new build
    Yes, you would.
    There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

    Comment


      #3
      Originally posted by Bonehead33 View Post
      How viable would it be to keep the current residential home in our names, (or better just in my wife's name as she is a lower rate tax payer) and take out a buy to let mortgage and rent it out long term?
      If the mortgage is joint, the ownership will have to be joint.

      Moving the property to a limited company is going to be difficult because of the timing - your limited company would require personal guarantees for a mortgage and you would need to be a property owner to be able to use the equity.

      Have you considered a mortgage on the new property (the one you're going to live in) and paying off, or reducing the lending on the property you plan to let.
      Residential mortgages are usually cheaper than property investment lending, although it might wash out because of the tax allowance on the interest for a BTL.

      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


        #4
        If you can sell your former home for £400K with £300K mortgage to pay off , you would receive £100K and no capital gains tax to pay.

        Before you decide to rent out the property, you should check the rental demand for houses in your area and the current rents.

        Comment


          #5
          Wow, a £300k mortgage is going to take a sizeable monthly rental to service - and then the tenants decides not to pay - ouch.

          I would sell and use the £100k to buy 1 or 2 BTLs at £100k-£120k each with mortgages, spreading the risk.

          It may mean buying away from where you live but if you can get 2 properties close by it should be fairly straight forward to handle yourself.

          Of course, you could also look at Holiday Lets and have a company manage them for you if capital appreciation is your primary focus - and one would make a nice retirement 2nd home by the coast too.
          My views are my own - you may not agree with them. I tend say things as I see them and I don't do "political correctness". Just because we may not agree you can still buy me a pint lol

          Comment


            #6
            Originally posted by Gordon999 View Post
            If you can sell your former home for £400K with £300K mortgage to pay off , you would receive £100K and no capital gains tax to pay.

            Before you decide to rent out the property, you should check the rental demand for houses in your area and the current rents.
            The local demand for a 5 bed detached is sky high. Rental is around £1600 pcm and mortgage of around £600.
            it's the bloody stamp duty that might be the deciding factor!

            Comment


              #7
              Originally posted by landlord-man View Post
              Wow, a £300k mortgage is going to take a sizeable monthly rental to service - and then the tenants decides not to pay - ouch.

              I would sell and use the £100k to buy 1 or 2 BTLs at £100k-£120k each with mortgages, spreading the risk.

              It may mean buying away from where you live but if you can get 2 properties close by it should be fairly straight forward to handle yourself.

              Of course, you could also look at Holiday Lets and have a company manage them for you if capital appreciation is your primary focus - and one would make a nice retirement 2nd home by the coast too.
              I could stand the risk of the tenants don't pay it's keeping the house in the family for the future which would be the long term goal. I agree there may well be more profitable avenues but keeping hold of this house is the goal if possible.

              Comment


                #8
                Originally posted by Bonehead33 View Post

                The local demand for a 5 bed detached is sky high. Rental is around £1600 pcm and mortgage of around £600.
                it's the bloody stamp duty that might be the deciding factor!
                £300k mortgage only costing £600 - is this interest only?

                As for the stamp duty - pay up

                Comment


                  #9
                  Originally posted by Neelix View Post

                  £300k mortgage only costing £600 - is this interest only?

                  As for the stamp duty - pay up
                  Yes interest only. Plan to take the rent, pay the mortgage, save the remainder then pay off mortgage in lump sums when fixed term expires every 5 years to avoid ERC but also to keep the committed mortgage payments low to ensure voids are affordable rather than committing to a repayment mortgage. Luckily I will get a sdlt refund of 16k when buying new house so that will mostly pay for the stamp owed for this plan above.

                  Comment


                    #10
                    I've just read the CGT guidelines. Have I got it right that there's no CGT to pay as the house that were looking to sell to a new ltd company is currently our main residential home rather than it currently being a BTL?

                    Comment


                      #11
                      There's a specific tax relief (for CGT) which is that any gain while a property is your principal residence is not taxable.
                      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


                        #12
                        Thanks Mr Keates

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