Advice for me & my sisters inheritance money

jimofwales

I have paid the inheritance tax, it was a lot of money. However, the 100k cash was mostly exempt because it was left to my dad from my grandad 4 years ago. (The same bulk of cash had already been subject to tax) My family don't have much luck.

Also my dads partners share of the house was written off.

@FBThree - yes, i will be sorting a will very soon.

The house is in a lovely area of Cardiff and it is a 5 bedroom. However, I don't think I could bare to rent it out as I am too emotionally attached to it. If I was to rent property I would have to buy somewhere else, I think.

Xbigman

I wouldn't pay money into a pension in a lump sum like that, it just ties it up.

I'd sell the house. Keeping it and renting is time consuming and as its presumably half owned by your sister it could be an issue in the future if one of you wanted to sell and the other not. Clear out the joint ownership and emotional issues now. I'd also sell as soon as I could, house prices are most likely to be static but might drop. I'd want the money in the bank now.
Is the house in its own grounds? If so you should at least enquire about getting planning permission to demolish and build flats/houses there. Its unlikely but will be very profitable if possible. But don't get too emotionally attached to the property over this. Any buyer could do the same. Its happened several times where I live.

Lastly, never go to your bank for financial advice.
Regards




X

isofa

I agree regarding pensions, if you do sell and don't plough it back into a property of your own, it'll be worth talking to a good independent financial adviser to spread your investments for long term growth and return. Everyone on here has different opinions, but it's important you do what is right for you. But never take advice from a bank, they will sell their own projects, and these are likely to be bad performers.

I really hope advice to demolish large houses in grounds and build flats isn't too common on here, that type of rogue "garden" development, which seems to have no planning issues at present (no doubt because it brings in lots of extra council tax) is ruining areas already. There has been much discussion on this topic in the broadsheets and also on the BBC, hopefully planning laws will be adjusted to stop beautiful neighbourhoods being ruined by greedy developers.

I'm all for making money, but never at the expense of other people or in this case a neighbourhood; flats completely change the look of an area.

As the OP is emotionally attached to the house, it's unlikely he'll want to knock it down to build flats anyway.

If you do keep the house, get a solicitor to draw up an agreement between you and your sister showing 50% ownership each, it's always best to have things legal, as families can be very strange when money and Wills play a part.

Whatever you choose to do, good luck to you, be wise, and that money will look after your life, you may never even have to have a mortgage.

jimofwales

Thanks isofa...

In regards to knocking the house down and building flats. Thats totally out of the question as it is a terraced house, over 100 yrs old and one of the prettiest streets in Cardiff. I hate these huge new 'luxury' apartment blocks. Loads have sprung up round here and they're often built cheap and look awful!

The house price thing is so confusing! Loads of people have told me to sell it quick because house prices are going to drop...and then I read an article the other day saying they're going to rise 40% in the next few years because of a lack of supply of new houses. Will it really make much difference what I do...as the mortgage on my dads house was protected, it is mortgage free. So if the market drops I may get less....but then will have to pay less for the house I buy...and visa versa?

I have spoken to an IFA I think I trust, what kind of fee should I expect to pay?

Jonbvn

jimofwales wrote: »

Thanks isofa...

In regards to knocking the house down and building flats. Thats totally out of the question as it is a terraced house, over 100 yrs old and one of the prettiest streets in Cardiff. I hate these huge new 'luxury' apartment blocks. Loads have sprung up round here and they're often built cheap and look awful!

Being a good honest Kairdiff boy, I cannot see property in the city maintaining current levels, even at the price you are considering selling at. I believe this, since I have been on the lookout for a suitable property in that range, and am aware very few properties are selling.

fimonkey

jimofwales wrote: »

The house price thing is so confusing! Loads of people have told me to sell it quick because house prices are going to drop...and then I read an article the other day saying they're going to rise 40% in the next few years because of a lack of supply of new houses.

After todays stock market wobble, perhaps you need to have another think about when the best time to sell is... there's no certaintly either way, you could panic and sell now, and ultimately win if house prices drop/or you can hold onto property and either a) house prices drop = you loose out. b) house prices stay the same = no difference to you. For sure though, no sane person is putting their money on house prices rising right now.

btw, my sympathies to you. My dear mother passed away in November, it took 6 months for probate and her house sale to complete, the day it did I cried buckets! Good luck whatever you do.

EdInvestor

Netting out the partner's share of the house proceeds we seem to have a total of 450k, ie 225k each for Jim and sister.

If they both want to buy a property there won't be much left over will there?

If this is the plan, the money should be kept in cash accounts.You need a 5 year time frame for risk investments.

jimofwales

Jonbvn wrote: »

Being a good honest Kairdiff boy, I cannot see property in the city maintaining current levels, even at the price you are considering selling at. I believe this, since I have been on the lookout for a suitable property in that range, and am aware very few properties are selling.

As I said earlier, I don't know much about house prices but Cardiff is a desirable place to live, the house is in Pontcanna as well, a house just down the road didn't take long to sell.

fimonkey - thanks, sorry to hear about your mother, it's so hard losing a family member, especially as i'm still quite young. Back to the grim business, when you say 'house prices drop - you lose' I know obviously there would be less money in the bank, but I guess prices would drop by a similar level across Cardiff, so if I was to buy a small house straight away, would I really lose out?

Something else I forgot to ask - when I get the 100k through, what is the best account to put the money in for the year whilst i am studying my Masters? I won't need access to it for that year, just something that will give me a good rate and obviously has no risk.

Thanks again for all your help. I very much appreciate it.

isofa

With 100K you could put it into a 1-year fixed rate bond, many at 6.7 or 6.71% gross (BMW, Birmingham Midshires etc) at the moment - completely risk free and the return in guaranteed. (This is a cash bond, effectively a high rate account with a 1 year lock in, nothing to do with stocks/shares/fund "bonds" which obviously have a risk, but a potentially better payout).

Or if you want instant access, the usual suspects: Icesave, ICICI, Tesco, Sainsburys, all will be a good gross rate, gross - and if you are earning (including interest) less that £5225 this tax year, you can have gross interest.

However! 6.7% on 100K will obviously push you over this limit giving £6700, so then you'll have to opt for net interest, in which 6.7% will equate to 5.36%, and give £5360 on 100K in one year. That darn taxman!

If you still have your ISA allocation, definitely stick 3K into a high rate ISA, and keep doing so each year thereafter as it's tax free.

You could also look at other tax free alternatives, you can shelter as much as 30K (two x 15K) in a 3 year and 5 year NS&I Savings Certificates, but as your tax threshold is low, and you'll probably need the money for a house, I go for the above options instead.

If house prices drop, they are likely to drop by a similar percentage in the same area so you won't loose your buying power. Over time house prices always do well, but they are a long term investment. Which is why I've mentioned several times seriously considering keeping and renting the house, if you were to sell, I'd get the share of the money into a property for yourself as quickly as possible - but that's just my personal opinion.

It's a bit like a 100K house purchase 10 years ago, let's say today that is probably worth 250K (or more in many areas), sure you've "made" 150K on the house, but all the other houses you want to buy will have gone up by a similar rate too, so it's a moot point, unless you own multiple properties.

margaretclare

Can't give you any advice - condolences, but no advice. I'm just so glad that you're not heeding the advice to 'knock down the house and build flats'. This is an appalling idea, and it seems to be happening a lot around here (the so-called Thames Gateway). There have even been attempts to build on people's back gardens, the big gardens that were common in the early 20th century.

Good luck to you.

Margaret