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rental / tax / advice
patsystone
Posts: 3 Newbie
Hi there I am looking for some advice.
I own a property that I rent out; the mortgage balance is around £156k and I have it on a buy to let mortgage as I was advised that was the most tax efficient way to work. (I live in another house thT i have a mortgage on and am a higher rate tax payer, if that makes a difference) I have around 10 -12 years left on the mortgage and at that point will need to sell the house as I have not made provisions to pay off the balance (have never been very good at financially planning for the future!).
For the past 3 years a family member has lived in the house and I have not made a profit however they are moving out and from October, I will be letting it on the general market and with my rental income versus my currently low mortgage payment, I will be making around £350 - 400 per month profit which I will obviously be liable to pay tax on. It is a victorian house and will soon require quite a bit of updating; I have jsut spent over £2.5k to get it smart for new tenants and it will soon need a replacement bathroom etc. So, my questions are:
1) Should I transfer to a capital repayment mortgage as I am paying tax on the profit from the income anyway and at least that way I would be chipping away at the outstanding balance?
2) Should I just sell it and use the equity (prob around £60k) to invest in a pension (I am 40 and have not been preparing well for my older age, which has now started to become a concern for me!)
I know that ultimately it is my choice but I would be really grateful for some thoughts / advice :-)
Many thanks in advance for your help.
I own a property that I rent out; the mortgage balance is around £156k and I have it on a buy to let mortgage as I was advised that was the most tax efficient way to work. (I live in another house thT i have a mortgage on and am a higher rate tax payer, if that makes a difference) I have around 10 -12 years left on the mortgage and at that point will need to sell the house as I have not made provisions to pay off the balance (have never been very good at financially planning for the future!).
For the past 3 years a family member has lived in the house and I have not made a profit however they are moving out and from October, I will be letting it on the general market and with my rental income versus my currently low mortgage payment, I will be making around £350 - 400 per month profit which I will obviously be liable to pay tax on. It is a victorian house and will soon require quite a bit of updating; I have jsut spent over £2.5k to get it smart for new tenants and it will soon need a replacement bathroom etc. So, my questions are:
1) Should I transfer to a capital repayment mortgage as I am paying tax on the profit from the income anyway and at least that way I would be chipping away at the outstanding balance?
2) Should I just sell it and use the equity (prob around £60k) to invest in a pension (I am 40 and have not been preparing well for my older age, which has now started to become a concern for me!)
I know that ultimately it is my choice but I would be really grateful for some thoughts / advice :-)
Many thanks in advance for your help.
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