What to do with Inherited house

beanielou

If i was you i would sell your current house.
Remortgage inherited house to pay off defecit on your old house & pay off debts.Very roughly you would half your mortgage & be debt free if Ive picked things up correctly.

IWantToBeFree_2

On the CGT issue, what you would need to do is opt for the Inherited house to become your Principal Private Residence from when you moved in, if you then sell your old house within 3 years of changing your PPR status, any CGT on the sale would be covered by PPR relief as you get the last 3 years of ownership included regardless of whether you have lived there or not.

Would be a mute point anyway given that the house is currently standing at a loss.

mssloan

If you want any advice on switching homes and CGT, why not try asking your local MP for advice. :rotfl:

Sorry...couldn't resist...I'll go away now.

Verbatim

Well it depends on how much you're struggling now. I have to declare a bias in favour of property for long term security. Unlike other investments it's under your control and won't disappear in a stock market crash.
So if you can manage it, depending on your debt level/SOA I'd say move to the nicer house and rent out your terrace. By all means switch to IO mortgage if you have to and the interest on a BTL mortgaga is offsettable against income tax if you make a profit. But in the long term the house could become an income in retirement so plan to switch back to a repayment mortgage and keep it rather than sell.

DVardysShadow

Keep nan's house in her estate for a while until you sell yours [assuming you move into nan's place]. At least have a think about when to transfer the house to your ownership

euronorris

Willow_K wrote: »

I'd move into the inherited house, switch to an interest only mortgage on the other house to reduce the mortgage to a level that would be covered by rent on the basis that you will be selling before the mortgage term is up.

Rent the terraced house out to cover the IO mortgage plus hopefully some of your other debts then sell it when the market recovers or some time in the future before the mortgage term is up.

If you rent it, the money you save from your current £600 mortgage can go towards paying your other debts or doing the new house up.

I think this is your best option.

BUT, please look into how much tax you would need to pay on the income generated from the rental property.

I think the above suggestion will a) allow you to hold onto both properties b) reduce your mortgage payments significantly (provided that the tennants pay on time) and c) provide you with extra money in your budget to clear other debts and/or do up inherited house.

I would get some advice on being a landlord though and all that it entails. The positive as well as the negative etc. Figure out how much you would need to put aside each month for annual check ups, or any other maintenance issues.

Good luck!

IWantToBeFree_2

You would also have to clear it with your mortgage company that you could rent your house out.

We wanted to rent ours out, they would let us but on 3 stipulations:

- We paid £100 for them to allow it
- We charged 125% of our mortgage payments as rent
- We used a proper letting agent

There is no way we could have rented our house out at 125% of our mortgage, even if we switched to IO we would have still struggled, you could have had a nice 2 bed flat in the centre of Leeds for less. Plus the fact that we would lose around 15% to a letting agent, and would have tax to pay as the interest on the mortgage would be less than the 110% income remaining after the letting agents fees.

Plus, there is the hassle of it all, you only have to read the forums on here to see all the pitfalls of renting your house out.

Whatever happens, I imagine you won't want to leave it too long before you make a decision, having an empty house can be asking for trouble.

jt2k6

beanielou wrote: »

If i was you i would sell your current house.
Remortgage inherited house to pay off defecit on your old house & pay off debts.Very roughly you would half your mortgage & be debt free if Ive picked things up correctly.

Yeah think you have a pretty good handle on things there!!