Retired parents selling home

foreverglitters_2

Hi my retired parents are thinking of selling their £400 000 house, putting the money into a bank account and looking into the options of renting a smaller place with the interest. They were also looking into the idea of buying a flat in their name eg £120 000 which i would rent from them. Could anyone help with any problems we might encounter? Thanks

seven-day-weekend

They will have to declare any profit from the rental (after allowable expenses)to HMRC and pay tax on it if their total income is more than their tax allowances.

Also, if the property has gas it will be required to have a Gas Safety Certificate.

Annisele

Security of tenure might be an issue for your parents. Theoretically they could have to find a new place to live every six months or so, if their landlords want their house back - which would be pretty disruptive!

CLAPTON

whether it makes financial sense depends upon their overall financial position (especially what pensions they have) and their age

on 400,000 one could perhaps earn 3% gross i.e. 12,000pa or 9,600 after tax at 20%
however if they were youngish people then inflation would eat into this sum and may make a very uncomfortable life in a few years time

powerwin

Why would they rent somewhere when they can afford to buy? Wouldn't it be better to buy two properties, one for themselves, and then another that they can rent out??

Interest rates are really low at the moment, so putting a lot of money into a savings account isn't a great idea, because you won't get much interest and inflation will be decreasing the "real" value.

Rgds