tax implications on my inherited property, selling or renting?

atush

newdave1975 wrote: »

thanks for everyones reply, it is very much appreciated. food for thought on many points. Im 67 and in general good health. dont have much family, so basically what i have is my own, no other considerations. i was just interested in any possible tax liabilities with my 2 options. renting would boost my income, but downside renting can be problematic, although i have somewhat negated this by letting my agent fully manage the process. and as a plus i still have the property to sell later, maybe when prices improve.
also i could just sell on the property and look to distribute the lump sum into safe places. i got bitten during the 2008 crash badly with the banks, so not keen on stock/shares at the minute.

P

how did you get bitten badly by banks in the crash?

did you only have shares in banks? did you sell shares when they dropped/crashed?

Or did you only own shares in say, northern rock? Ie banks who failed?

i am just trying to understand how you got burned.

Generally single shares (like in say Northern Rock) are risky as if just one bank (them) fail you lose all. But invest in a fund which holds banks shares, then you might lose a bit (on paper short them) but you wont lose all. and later when shares go back up, you recoup losses and start into gains.

newdave1975

well when i say lost, i guess not a loss as such. i gained some shares on a building society going from mutuality to a bank. held on to the shares as i was receiving a fair dividend. then 2008 shares dropped so worth very little from what they were. similarly inherited some bank shares too and they too lost in value. so i guess although i didnt pay for these, so not a loss as such. i still lost out as their value if id sold before 2008 would have been substantial. ... i guess thats the market though.

P

atush

which is why single shares are risky. And risk averse people like yourself should not own them?

but if you hold a fund, which owns shares in 100 companies, can you not see how this is MUCH less risky? As one company could fail but in theory you would lose just 1%? This is once example of diversification.

If you leave money in cash, esp at todays low rates, you will lose out to inflation. your cash pot slowly shrinking over time in spending power. Where as equities over time return around 5% plus inflation. Meaning you keep up with inflation and spending power.

newdave1975

atush wrote: »

which is why single shares are risky. And risk averse people like yourself should not own them?

but if you hold a fund, which owns shares in 100 companies, can you not see how this is MUCH less risky? As one company could fail but in theory you would lose just 1%? This is once example of diversification.

If you leave money in cash, esp at todays low rates, you will lose out to inflation. your cash pot slowly shrinking over time in spending power. Where as equities over time return around 5% plus inflation. Meaning you keep up with inflation and spending power.

yes i see what your saying. The shares from the demutualised banks were my first introduction to share ownership, i was enjoying a regular dividend and saw no reason to sell them. But yes ive learned that any equity can fall and will think long and hard about my next move, if i do sell.
P

kidmugsy

In principle the low-risk, low-hassle option is to sell the house and use a large part of the money to buy an index-linked annuity. Then the income stream is guaranteed to see you out, however long you live. The disadvantage is that annuity rates are low at the moment, by historical standards.

That's why pension deferral is attractive: it's like buying an annuity but with a much higher yield. But, say, a three year deferral is not going to absorb £120k. Moreover, the Extra Pension would be taxed while much of the pension that you would have suspended would have been untaxed, which reduces the attraction a bit.

In the autumn the government is also going to offer people your age the chance to buy a "pension top-up": for about £20k you'll be able to buy an extra £1300 p.a., index-linked (at the moment) to CPI. The offer expires in April 2017. That might be a useful tool if you were looking to diversify the investment of £120k.