Second propery letting /sharing query

lucycxs

My other half has a new job too far away to commute daily, so we are looking to buy a flat for him to live in during the week. It would make sense to let a bedroom a) for company and b) to help with the costs. As he will be living in the flat Mon - Thurs weekly it is not strictly a buy to let situation, or is it? The £30k mortgage on our main house is in our joint names and has only a couple of years left to run. We are thinking of remortaging and buying the new flat outright, possibly in his in his name only, but I am not sure what the tax implications would be if we did that? Would it be better to have the new mortgage assigned to the new flat rather than the main house? We are thinking of buying for around £180k and our main house house is worth approx £270k. Our main query is what kind of mortgage we can go for and what would be the most tax efficeint way of arranging matters?

dimbo61

Your main home may well be worth £270K but in the current market no surveyor will value it above £250K ( think stamp duty)
So you want to take out a mortgage debt of £30,000 you already have and another £180,000 on top to but a second home ( flat) which your OH will stay in 3/4 nights a week!
The mortgage on £180K at 3.89% (FD 5 year fix with 65% LTV) would be £940 a month.
Now you can get £425 a month tax free in the governments "rent a room scheme" but I dont think you have enough equity to get that good a deal.
Could your OH look at renting a room himself or B&B 4 nights a week

getmore4less

dimbo61 wrote: »

Your main home may well be worth £270K but in the current market no surveyor will value it above £250K ( think stamp duty)
So you want to take out a mortgage debt of £30,000 you already have and another £180,000 on top to but a second home ( flat) which your OH will stay in 3/4 nights a week!
The mortgage on £180K at 3.89% (FD 5 year fix with 65% LTV) would be £940 a month.
Now you can get £425 a month tax free in the governments "rent a room scheme" but I dont think you have enough equity to get that good a deal.
Could your OH look at renting a room himself or B&B 4 nights a week

On your main residence

http://www.hmrc.gov.uk/individuals/tmarent-a-room-scheme.shtml

lucycxs

lucycxs wrote: »

My other half has a new job too far away to commute daily, so we are looking to buy a flat for him to live in during the week. It would make sense to let a bedroom a) for company and b) to help with the costs. As he will be living in the flat Mon - Thurs weekly it is not strictly a buy to let situation, or is it? The £30k mortgage on our main house is in our joint names and has only a couple of years left to run. We are thinking of remortaging and buying the new flat outright, possibly in his in his name only, but I am not sure what the tax implications would be if we did that? Would it be better to have the new mortgage assigned to the new flat rather than the main house? We are thinking of buying for around £180k and our main house house is worth approx £270k. Our main query is what kind of mortgage we can go for and what would be the most tax efficeint way of arranging matters?

Thanks for this. OH is renting at present, to the tune of £480pcm so money down the drain really. Hence our thinking to buy rather than rent.
Can we use the rent a room scheme if he is only there 4 nights per week?