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Dilemma - quite a few house buying/renting/mortgaging questions in here!
Polovski
Posts: 60 Forumite
I bought my first house and have the following mortgages on it
£63,320 at 4.89% fixed till 2010 (repayment)
£32,845 at 5.39% fixed till 2011 (interest only)
I saw a house i wanted to buy and used the remortgage to pay the deposit and for building work on the second house which has a mortgage of
£148,595 at 5.19% until August 2008 (interest only)
I am currently renting property 1 and have only just asked the lender if i can let the property:eek: . They have agreed in principle that i can let it for a max of 2 years for a £100 fee (i am waiting for paperwork), I am going to say that the property is let from June 1st this year which will give me until May 31st 2009 to either change to a buy to let or to sell the house - either way i will pay 3% penalty for leaving or switching to BTL because of the tie in period.
Since moving to property 2 i have done quite a lot of work (a kitchen extension) and it is now worth a fair bit more than the £165k i paid for it. Houses without the extension in my street have gone for £185k recently.
Anyway – I have a couple of questions I was hoping people could help me with!!
1. Will I have to pay capital gains tax when I do eventually sell property 1(currently worth £125k)?
2. How much should I actually be paying the tax man (rental income is £500)?
3. Should I have the house re-valued?
4. Should I inform the lender on property 2 that the property is worth more because of extension (I’m just waiting for building regs to sign it off)?
5. Should I inform my insurer of the increase in value?
Sorry for all these questions at once but I’m just trying to sort out my finances now and I seem to have made a bit of a hash of everything so any help and advice anyone can give would be very gratefully received!:beer:
£63,320 at 4.89% fixed till 2010 (repayment)
£32,845 at 5.39% fixed till 2011 (interest only)
I saw a house i wanted to buy and used the remortgage to pay the deposit and for building work on the second house which has a mortgage of
£148,595 at 5.19% until August 2008 (interest only)
I am currently renting property 1 and have only just asked the lender if i can let the property:eek: . They have agreed in principle that i can let it for a max of 2 years for a £100 fee (i am waiting for paperwork), I am going to say that the property is let from June 1st this year which will give me until May 31st 2009 to either change to a buy to let or to sell the house - either way i will pay 3% penalty for leaving or switching to BTL because of the tie in period.
Since moving to property 2 i have done quite a lot of work (a kitchen extension) and it is now worth a fair bit more than the £165k i paid for it. Houses without the extension in my street have gone for £185k recently.
Anyway – I have a couple of questions I was hoping people could help me with!!
1. Will I have to pay capital gains tax when I do eventually sell property 1(currently worth £125k)?
2. How much should I actually be paying the tax man (rental income is £500)?
3. Should I have the house re-valued?
4. Should I inform the lender on property 2 that the property is worth more because of extension (I’m just waiting for building regs to sign it off)?
5. Should I inform my insurer of the increase in value?
Sorry for all these questions at once but I’m just trying to sort out my finances now and I seem to have made a bit of a hash of everything so any help and advice anyone can give would be very gratefully received!:beer: !
0
Comments
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HELP!!!!:eek:
sorry, i realise that there are quite a few issues covered here, tax, mortgages, capital gains etc but if you can answer just one part or point me in teh right direction i would be eternally grateful!:beer:!0 -
Answers in blue:
1. Will I have to pay capital gains tax when I do eventually sell property 1(currently worth £125k)?
If it has been your principal private residence you will be exempt from CGT for the time it was your home and the last 3 years of ownership. If there is any CGT liability beyond this, it is calcualted as a propertion of the total time you owned it. In addition you can claim taper relief and letting relief, so I doubt you will have any CGT liability.
2. How much should I actually be paying the tax man (rental income is £500)?
Nothing, it looks like your mortgage interest is greater than your rental income.
3. Should I have the house re-valued?
Only if you want to remortgage.
4. Should I inform the lender on property 2 that the property is worth more because of extension (I’m just waiting for building regs to sign it off)?Only if you want to remortgage on to a better deal.
5. Should I inform my insurer of the increase in valueYes, they will need to know the rebuilding cost.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
a thousand thank yous!!!!!!:beer:!0
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