A property as a pension?

sleepless_saver

mharries1 wrote: »

My wife has had to retire due to ill health and has been receiving contributions based esa which has now come to an end. It appears as though she will not be able to claim any income based benefit due to this second property. .

If your self employment involves working more than 24 hours a week (however much you make) she wouldn't get income related ESA anyway whether you had a second property or not.

mharries1

Thanks for the informative replies.
Not sure I understand some of the maths though. A 28k investment producing £500pcm gives a yield in excess of 20% plus a 6 fold increase in capital.

System

If you had invested in commercial rather than residential property then you could have bought it through a pension. Then any appreciation would have been free of CGT, and accumulated income would have been tax-free within the pension.
Also the ownership would have been by the pension, not you personally., so disregarded for means-testing, deprivation of assets, etc.

atush

You said the property was 150-170K, not 28K. Which is it?

Therefore the yield issues.

greenglide

Bought at 28k current value 150 - 170k?

kidmugsy

greenglide wrote: »

Bought at 28k current value 150 - 170k?

Since you could sell it for £160k, your yield is low. Otherwise I'd be able to claim that a share was yielding 150% p.a. because I bought it for a song in 1974.

It's jolly nice that you'll be able to enjoy a large capital gain, but that isn't the same as your current yield. Mind you, if you had reason to be confident that its sale value is increasing at the moment at (let's pretend) 6% p.a. you could if you like argue that that should be viewed as part of your yield. Those of a more cautious disposition might take all talk of valuations with a pinch of salt until the house is actually sold.

Triumph13

greenglide wrote: »

bought at 28k current value 150 - 170k?

CGT= Ouch!

atush

At least transfer half the property to your OH before you sell it?

You base yield on the current value, i'd only base it on cost if I bought recently. Not 20 years ago?

If you strip out your costs from that 500/m, you are getting less on the house than you would on cash?