I've made £40k - what do I do????

bluep

Don't forget that BTL income is taxable as schedule A income (after some allowable costs are deducted), and any rise in value in a BTL property will be liable for capital gains tax (again, there are some deductibles and allowances - particularly if the property was your principle place of residence at some stage in the past or future).

btloptingout

bluep wrote: »

Don't forget that BTL income is taxable as schedule A income (after some allowable costs are deducted), and any rise in value in a BTL property will be liable for capital gains tax (again, there are some deductibles and allowances - particularly if the property was your principle place of residence at some stage in the past or future).

Tax will not be a problem!

There will be little rental income left once voids have been considered and re-furbs + LA fees have been taken into account.

The losses incurred on the capital depreciation will not be subject to CGT.

It really will be a tax free investment all the way!

leftieM

moyville wrote: »

I bought my house late 90's, a new estate went up across the road and the house prices went through the roof. It was a total fluke.

When it's sold I'll make £40k profit..... problem is, I haven't a clue what to do next. Here are my options [as I see them]:

1. Use all this profit as a deposit to move into a bigger house

2. Use 50% of the £40k for a deposit on a new house, purchase another house for Buy-To-Let with the rest [I don't even know whether this is possible]

3. Take out a remortgage on the current house, take the £40k and spend £20k as deposit on a new house, £20k for a BTL house, and rent out the original house. [Again, I don't know whether this is possible!!]. This way I end up with a new house and two BTL houses.

Any suggestions? a) I'd like to move into a bigger house, b) I'd like to become a property entrepreneur.

Have you costed any of this? From the outside, having 40k equity after 7+ years is modest. If your salary has risen dramatically in this time and you are comfortable spending much more money on mortgages then you can do the things you want to do. However the 40k itself isn't going to give you much leeway - if you want a bigger house generally you end up using the equity and borrowing more money.

horace_2

moyville old friend,

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Yes, our dear old colleague btloptingout has refreshed my memory concerning off shore accounts and together we pledge our undivided management of your interests.

horace

P.S Did you catch the last post or shall I send btloptingout to collect it?

xxxxx

ManAtHome

I'd have thought that bigger houses would have gone up by more than £40k - maybe you've actually made a loss?

That's the problem with the property boom - you tend to be a lot richer when you're dead...

wibble68_2

moyville wrote: »

I bought my house late 90's, a new estate went up across the road and the house prices went through the roof. It was a total fluke.

When it's sold I'll make £40k profit..... problem is, I haven't a clue what to do next. Here are my options [as I see them]:

1. Use all this profit as a deposit to move into a bigger house

2. Use 50% of the £40k for a deposit on a new house, purchase another house for Buy-To-Let with the rest [I don't even know whether this is possible]

3. Take out a remortgage on the current house, take the £40k and spend £20k as deposit on a new house, £20k for a BTL house, and rent out the original house. [Again, I don't know whether this is possible!!]. This way I end up with a new house and two BTL houses.

Any suggestions? a) I'd like to move into a bigger house, b) I'd like to become a property entrepreneur.

40k in the last 8 or 9 years?

I don't think becoming a property entrepreneur would be a good move for you.

The average property has made 100k since 2001.

Are you sure you don't mean 400k

btloptingout

horace wrote: »

moyville old friend,

you have two buddies on this site and together we can `grow` your dosh amazingingly quickly, AND, AND silly,silly me TAX FREE !!

Yes, our dear old colleague btloptingout has refreshed my memory concerning off shore accounts and together we pledge our undivided management of your interests.

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barnaby-bear

moyville wrote: »

I bought my house late 90's, a new estate went up across the road and the house prices went through the roof. It was a total fluke.

When it's sold I'll make £40k profit..... problem is, I haven't a clue what to do next. Here are my options [as I see them]:

1. Use all this profit as a deposit to move into a bigger house

2. Use 50% of the £40k for a deposit on a new house, purchase another house for Buy-To-Let with the rest [I don't even know whether this is possible]

3. Take out a remortgage on the current house, take the £40k and spend £20k as deposit on a new house, £20k for a BTL house, and rent out the original house. [Again, I don't know whether this is possible!!]. This way I end up with a new house and two BTL houses.

Any suggestions? a) I'd like to move into a bigger house, b) I'd like to become a property entrepreneur.

What about investing in Romania or Bulgaria, where that 20k will fund a higher percentage? The yields quoted there are said to be very high and eastern european economies are predicted to boom.

hearts

"What about investing in Romania or Bulgaria, where that 20k will fund a higher percentage? The yields quoted there are said to be very high and eastern european economies are predicted to boom."

Thats the funniest one yet ;-) Are you a Nigerian?

As has been said 40k is not a great return for the period you mention. Unless your area is still relatively untapped, and some are. Then as has been said give it to Horace, he knows best ;-)

Melissa177

40K in 8 years is 5K a year. That sort of appreciation might have happened on a house which cost 50K to start with (this was possible back in 1998/9)

My considered advice would be:

- Think about what you ultimately want? How do you plan to get there? 10-20 year plans might sound a bit scary, but they are a useful tool to help you work out where you want to go.

- If you want to put 20K into a BTL property, you usually need about 25% deposit, and enough rental income to cover 125% of the mortgage. Can you buy a house for 80K in your area? What kind of rent would you expect to receive for a property worth 80K (if you're in a university town, the returns could be quite good)? What kind of mortgage could you support on your own income, and would that plus 20K deposit allow you to buy your own property?

- Rental incomes are rising fast and furious, according to the papers this morning, but i expect there are regional variations (as always). What is your local area like? Are rents going up or down?


Remember, unless your income has risen considerably in the intervening years, you are unlikely to be able to afford a bigger mortgage than you have already. You're buying into the same market that you've sold into, and hence this 40K isn't really a profit at the moment - you have to live somewhere!

Good luck - if you don't mind me saying, I think your naivety doesn't bode well for you being a landlord, but then I've only seen one post!