Thinking of selling house, paying off mortgage and renting. Would I have to pay tax?

debsley_pig

Hubby and I are currently deciding whether to put our house on the market to pay off our mortgage, debts and move to another town and rent for a while. We have good reasons for thinking this, which I won't bore you with. However, we will have a lump sum left after everything is paid off, and I need to know whether we will have to pay any tax on this.

Anyone know? Thanks in advance.

Kitikat

I believe that you would pay tax on any interest you made on the lump sum, providing that you are a tax payer. If one of you pay a higher rate of tax than the other you may want to consider having the money in one name only ie. the lower rate tax payer, but you have to be 100% certain that neither of you would do a runner with it. I have no experience in this area so you will probably get a lot more sensible answer from somebody with more knowledge.

lizzyb1812

Assuming your house is your "only or main residence" you won't pay tax on the lump sum, only on any interest you earn if you put it into investments/savings.

lizzyb

amyandoli

i sold up dec 2005, paid off mortgage and debts and didnt pay tax on £30k lump sum as quit job at same time.

lizzyb1812

Just to clarify - you would not have paid tax even if you had stayed in your job.

lizzyb

UK007BullDog

You do not pay tax.

Stash the left over money safely so that you have it in the future when You want to use it as a deposit for a new mortgage.

Also make sure you consider the cost of renting compared to a mortgage, and that it will be affordable for you.