Move back into own property or rent elsewhere?

jazabelle

They could ask you to pay the full mortgage back straight away.

tylerjames

thanks. it appears i should sort one thing out at a time. first of all, can i rent my place out (even though i'm already doing it). i will call mortgage company and see what they say, obviously saying i'm living there but thinking of letting it out. depending on that info i can make my next decision.

agrinnall

tylerjames wrote: »

The rent income is more than the repayment mortgage amd I am not declaring any of this income for tax purposes. I don't understand how this works either, because whats to stop me reducing the mortgage term in order to increase the interest to the same amount as the rent and then pay no tax?

I thought I would give you an answer to this question. There is nothing to stop you doing what you suggest, assuming your mortgage provider agrees to it once you have sorted out the consent to let. However, I would assume that so far your rental income has been greater than your mortgage interest, unless any other allowable expenses reduce your net profit from renting to zero or a loss then you are required to complete a tax return to declare that profit and be taxed on it at your marginal rate. From wht you say I assume you have been letting the flat for several years so you really need to get some advice on how to approach declaring the profits from tax years prior to 2011/2.

http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=L902pc5Wsb8&formId=3061

While I'm on tax, you also need to make yourself aware of the rules regarding Capital Gains Tax on property that is not your main home; there are things you can do to reduce the potential tax or take the property out of CGT altogether but you need to do some forward planning to make the best of this.

http://www.hmrc.gov.uk/cgt/intro/basics.htm

wnoktnwbr

tylerjames wrote: »

Well I would much appreciate some advice, somethings got to give, I feel like I'm going to explode!!

1. How much did you buy the property for?
2. How much was the mortgage?
3. How much do you owe on the mortgage?
4. How much do you expect the property to sell for based on similar properties in the area?
5. How long is left on the lease? 50 years? 60 years?
6. Do you work an unskilled job (eg: retail) or a job that you need qualifications/experience for?

If you answer those 6 questions people will be able to give you better advice/opinions, as those are the things that matter.

SuzieSue

If you really want to quit your job then you should stay where you are. If you rent a place and then quit of your own accord I don't think you will be entitled to any benefits at all as you will have deliberately made yourself jobless.

I know you want your independence but that means working unless you are independently wealthy which you aren't. So you have to decide what you want more - being independent or leaving a job you hate.

tylerjames

1. How much did you buy the property for? £142,000
2. How much was the mortgage? approx £110,000
3. How much do you owe on the mortgage? £98,000 now
4. How much do you expect the property to sell for based on similar properties in the area? identical property sold for £131,000 due to lease shortening
5. How long is left on the lease? 50 years? 60 years? just over 66 years
6. Do you work an unskilled job (eg: retail) or a job that you need qualifications/experience for? unskilled, i work as a delivery driver

tylerjames

In reply to Suzie, thanks for your post, I have read it and can tell you first of all I want independence and own place, as my original post suggested. I would reluctantly stay in the job, but would have to be working towards a better job, whether that's doing an evening course to gain qualifications or just applying for different jobs.

SuzieSue

tylerjames wrote: »

In reply to Suzie, thanks for your post, I have read it and can tell you first of all I want independence and own place, as my original post suggested. I would reluctantly stay in the job, but would have to be working towards a better job, whether that's doing an evening course to gain qualifications or just applying for different jobs.

Well, if your independence is so important to you then what I would do is stay living rent-free at you parents' for another few years and save as much as you can to pay off your mortgage. You have a great opportunity to do that by sacrificing your independence for a few years. You're only 31 and I know it is hard because I did exactly the same (except it was worse for me because I had to share a bedroom with my sister in my early thirties). But now I am mortgage free and have all the independence I want - I can work when I want to and don't have to worry about losing the roof over my head. Yes, it was hard, but remember you have another 40 to 50 years ahead of you so another 3 or so years is nothing.

Emmzi

reducing the mortgage term will increase the capital you pay but NOT the interest so makes no odds for tax purposes.

You're currently evading tax and possibley have invalid insurance on your property if no one knows you are renting it.

I'd wait and see what the fines from the bank and taxman are before deciding anything.

kj*daisy

If you own a flat and then rent somewhere else, you won't get HOusing benefit to cover your rent as you will have a capital asset. If you want to quit your job then stay at your parents, HB would only pay shared room rate at you age anyway.