Time to sell or to continue to let out?

moneystuff_2

Hi,

Just joined and have read alot of interesting stuff in the forums. Can anyone point me in the right direction?
The last property I lived in has been let out for the last 2 and half years and the tenants want to renew for another year. The rent just about covers the mortgage.
However if I sell now I won't get hit by capital gains tax but say in another years time I will be hit and the longer I keep renting the bigger the CGT will be.
Is it time to cash in and sell, the property is in a village area so rental could be difficult in the future.
Should I cash in and get another property say in the city, just cash in and pay some of my current mortgage off, or continue letting?

Any thoughs appreciated?
Many thanks.
D

dealornodeal_3

Moneystuff just some ideas/thoughts, do you think property prices will continue to escalate, or do you think there will be a crash? Is age on your side! Will the FTSE crash, and lastly how good is our economy!

Good Luck!

Alan_M_2

My personal opinion:-

Cash in now and consolidate on your existing mortgage and make life a little easier. I don't have a crystal ball but the market is very finely balanced right now and could go either way.

mystic_trev

Alan_M wrote: »

I don't have a crystal ball but the market is very finely balanced right now and could go either way.

I looked in my crystal ball in 2004 and said the same thing. Time to get it out again and polish it up!

moneystuff_2

Thanks,
thanks doesnt look to be a right or wrong answer!

RabbitMad

Why will you get hit for CGT next year? The calc you need is:

((a-b)/c)*(c-(d+36))-40000

a=sale price
b=purchase price
c=total number of months owned
d=number of months you lived in property
36 is because you get 3 years grace as it was once you principle private residance
40,000 is the letting relief

If this number is above zero this is you capital gain that is chargeable. You get a annual allowance approx £8k. So until this number is above 8k you don't need to worry.

Once it is above 8k you transfer half the property to your wife / husband / civil partner if you have one. Then once its above 16k you pay cgt at either 20% or 40%

Therefore you should only sell to realise the gain when the time is right for you.

Hope this helps - although don't blame me if you hold on and the market crashes or you sell and the market rockets

Leighthal

RabbitMad wrote: »

Why will you get hit for CGT next year? The calc you need is:

((a-b)/c)*(c-(d+36))-40000

a=sale price
b=purchase price
c=total number of months owned
d=number of months you lived in property
36 is because you get 3 years grace as it was once you principle private residance
40,000 is the letting relief

If this number is above zero this is you capital gain that is chargeable. You get a annual allowance approx £8k. So until this number is above 8k you don't need to worry.

Once it is above 8k you transfer half the property to your wife / husband / civil partner if you have one. Then once its above 16k you pay cgt at either 20% or 40%

Therefore you should only sell to realise the gain when the time is right for you.

Hope this helps - although don't blame me if you hold on and the market crashes or you sell and the market rockets

This is one of the best sentences I have seen on this site.Only you can decide what you will be best off doing in the future(NOBODY POSTING HERE KNOWS HOW HOUSE PRICES WILL FARE IN THE NEAR FUTURE).

BTman

Leighthal wrote: »

[/B]

This is one of the best sentences I have seen on this site.Only you can decide what you will be best off doing in the future(NOBODY POSTING HERE KNOWS HOW HOUSE PRICES WILL FARE IN THE NEAR FUTURE).

What a refreshing change from hearing "prices only go up", thanks.

Leighthal

BTman wrote: »

What a refreshing change from hearing "prices only go up", thanks.

I don't know wether they will go up or down,neither does BTman.Only the OP can make a decision on what they think will happen.:T

Leighthal

Your saying that the rent only covers the mortgage payment.So in effect your only relying on HPI (house price inflation) for your gain in profit.Maybe if you paid down some of the debt on the BTL then you could gain some profit from the rental income?

Rimo2021

Leighthal wrote: »

Your saying that the rent only covers the mortgage payment.So in effect your only relying on HPI (house price inflation) for your gain in profit.Maybe if you paid down some of the debt on the BTL then you could gain some profit from the rental income?

From a tax saving point of view it's usually better to pay off any mortgage on your own home first as the interest you pay on your BTL is tax-deductable but the interest you pay on your own home loan is after-tax money