Buy to let or release equity?

Leo2014

Evening all!
I am hoping that you may be able to help me with my conundrum?!
To set the scene:
•I am a 39 yr old self-employed consultant earning £400 p/d c.£85k p/a
•I am married with 3 kids under 9yrs old
•I have no debts
•I have £10k in an ISA
•I own my family home outright: value c.£360k
•I own a 50% share in a 2 bed flat in Brighton – no mortgage – value c.£280k
◦Rental income £5,000 before tax
◦Have permission to mortgage my share
I am in a quandary as to what to do going forward!
First and foremost I want to be as tax efficient as possible.
Given the recent budget announcements re buy-to-let, my share of the income on the flat will be around £3k p/a after tax. Is it possible to transfer my share of the flat into a trust for my 3 kids so they can build a nest egg for education, house etc? Is this tax efficient?
Or do I mortgage my share and buy further buy-to-let properties in my kids' trust name?
Another option is to sell my stake in the flat which would be subject to Capital Gains Tax on £65k.
I could then use this money to contribute to moving house. If I did this I would look to borrow a further £150k to £200k to move to the 'dream' family home.
Or - do I do nothing! It is important to me that I set the kids up as best I can, but you also need to live!
As you can see I am unsure what to do. Any advice would be much appreciated.
Many thanks.

dimbo61

Sorry £5,000 or even £10,000 rental income from a £280K property is rubbish.
If you buy your dream home you and your family can all enjoy this property for years to come with No Tax to pay when you do sell and trade down.
The government seems to want to kick the he'll out of Landlords at the moment.
Do you need the hassle of being a Landlord for £5,000 a year ?
£65,000 is a nice holiday or university fees for 3 kids

Cornucopia

As a 40% Income Tax payer, you'll need to be looking at ISAs and other tax-free investments if you want to be tax efficient.

BTL is never going to look attractive once you've taken 40% income tax from the rental profit, and 28% CGT from any capital appreciation.

I would probably sell the stake in the flat now, and look at having several years worth of fully subscribed ISAs before considering BTL again.

Investing for children is a whole area of expertise in its own right.

Thrugelmir

Agree with others that it's time to pocket the gain from the BTL.

If nothing else that's a poor return.

Pixie5740

How would you mortgage your 50% share without putting the other owner on the mortgage?

Leo2014

Thanks for the advice guys - I put the flat on the market today!
Cheers

skippie

To follow up we've experience Askew Bunting (they did everything expected of them and were responsive)- sale fell through though.


Birchall Blackburn Law (Southport)- responsive solicitor and on the ball.

Mason Baggot and Garton- very responsive, easy to contact and email, good reviews, recommended by broker. Purchase fell through.

O'Neill Patient- Responsive, some mistakes made during conveyancing, but they were quick to rectify.

Use money supermarket to run a comparison on conveyancing, type your requirements in and look at the quotes against rating. Check the reviews left but also google online.

isplumm

Hi,

Questions -

1. Do you have LTD company?
2. Does your wife work?
3. Is her salary under the 40% bracket.

If so consider splitting your company (assuming you haven't done this), so you can pay her dividends as well - speak to your accountant for the exact amount - remember that if you split more than 50-50 to your wife you lose control.

Assume you charge VAT - depending on what your consultancy is look at the Flat Rate Scheme - again speak to accountant.

By the way - if you do have your own LTD company then you are not self employed - you are a director of your company.

Maximise your ISA for both of you - maybe look at a S&S ISA?

Thanks Mark