Buy to Let Mortgage or Not

Bumblingalong

I am in the military and I am serving too far away to live in my own home so I have rented it out - I lived in it for 5 years before renting it out. For that I had to change to a buy to let mortgage. I want to sell that house and buy a house in the town that I will settle in after leaving the military. I don't want the trouble of having letting agents and tenants so my Father will live in the house and pay just enough rent to cover the mortgage interest.

Will I have to have a buy to let mortgage or can I go for a standard repayment mortgage? problem with buy to let is I will not get enough rent - I will effectively be subsidising my Father. Will I have to pay any tax on the sale of my current house?

dimbo61

First off you might have to pay capital gains tax if you have rented out the house for more than 3 years ? before you sell it.

Bumblingalong

:)Thanks Dimbo61. I have now looked at CG tax. My house has been rented out for 5 years. Looking at the Inland Revenue info it is not clear to me what is classed as main residence.

I have owned the house for 124 months and lived in it for 65. my understanding is you get the last 36 months as if you lived in it which makes 101 months. 124-101=23. So 23/124 * profit (house price rise) of £84k means I am liable for £15.6k of capital gains.

Do you know if this is correct? If that is split between me and my wife = £7.8k each. Can I use the allowance of approx £10k?

How much does it cost to get a tax advisor:(

Wh05apk

My understanding is that you have 3 years after living in it sell it, I think the figure used, will be the increase in value from when you moved out to the sale date, if that is less than 3 years then fine if over 3 years then tax is liable. If the house is in joint names then you "share" the gain.

Severall lenders will allow you a residential mortgage and still let out the property if you are in the forces.