Two Houses, one in negative equity. Can i hand it back?

JC_Derby

amokach1 wrote: »

Thanks for the replys.

The mortgage plus service charge and rates on the appartment is £750. We get £400 per month. So its costing us £350. The way we always looked at it if we rent it out for 10 years we could have equity in it again. It's just the stress. We've got the usual worry, interest rates going up, unable to get a tenant. I mean we kind of compare the £350 excess every month as putting money into the house as an investment.

maybe if you look at it differently ie that 50% of the mortgage is being paid for you?
that value of property will rise with time...
????

amokach1

Thanks for your posts guys.

Yes it is a repayment mortgage on the flat. I guess if it's costing us £400 a month to cover it hopefully over a period of time it should be worth it. I mean how much would we be paying for a decent pension?

saverbuyer

Where is the flat?

amokach1

In northern ireland

saverbuyer

I thought so. The main forum can be very England centric.

I'd be looking to get rid of the flat ASAP especially as you're based in NI. Massive oversupply of flats here, it's unlikely you'll escape the negative equity for a long long time much longer than 10 years, more like 20 or 30. As a pension plan it's a useless one, you're costs are going to keep going up (rates and service charge) and the value down.

Only one way rates can go (up). I would seriously just take the negative equity in the form of a loan and run. You don't want to be chasing this to the bottom. I think flat prices are down 65% here in the last 5 years and still falling.

Make sure you are filling in all your tax returns even if you are making a loss. I know of several people who have been caught out recently.

amokach1

Thanks for your response. When you talk about tax returns what exactly do you mean? The flat was never bought as an investment, we are just stuck with it.

maninthestreet

amokach1 wrote: »

Thanks for your response. When you talk about tax returns what exactly do you mean? The flat was never bought as an investment, we are just stuck with it.

The rent received is income, so has to be declared to the HMRC.

amokach1

But if the rental income does not cover the mortgage payment then surely I do not have to pay any extra tax?

Is it just our case that hmrc need to know about it?

angelsmomma

It is not just about paying extra tax though. This is income which has to be declared.

If the mortgage is a repayment you can't claim the repayment part only the interest you pay, so you may still have tax to pay.

cte1111

You can offset the interest part of the mortgage against the income, along with an letting agent's fees. You should still declare the figures on your income tax return.

You will also end up with a capital gain, if the flat eventually sells for more than you paid for it initially.