Not a time to be a buy-to-let landlord

cells

westernpromise wrote: »

No idea but £70 a month sees me through to age 72.

The point is that I'm exposed to IHT regardless so it's irrelevant to the calculation. What's relevant is that I can in effect choose between selling now, incurring costs of probably 3%, 28% CGT, IHT on what's left, followed by stamp duty should my inheritors decide to re-enter the market. If the property started out at a million quid then the costs and tax bill from the sale are £300k, the IHT takes another £280k and the £420k left will buy a £398 investment property with £22k stamp duty.

Or I leave them the property with £350 to fund the IHT.

Which sounds like a better deal to you?

Probably better to gift it to them while alive

Gift before death
£1m house bought for £100k no mortgage
Give to kids. Pay the 252k CGT
Kids pay £44k stamp
Effectively they get the house
Cost was £296k

Leave after death
£1m house
40% IHT
Cost was £400k

Better off by over £100k to give it before death

You have the risk of dieing within 7 years but you can cover that risk with your life assurance idea

Also you get to sort out your stuff before you pop rather than have your kids potentially bicker and fight over inheritances

(Of course if you are under the IHT threshold then go through that rather than CGT but if over its close or better to go 28% CGT rather than 40% IHT)

AG47

dinkylink wrote: »

Does it not worry you that you can only a afford an interest only mortgage rather than repayment at these times of historically low interest/mortgage rates. Would you be screwed if rates rose?


Not a dig, just a genuine question. I would imagine there are a fair few people in your boat which makes me think the BOE will do everything in their power to keep interest rates low as otherwise there could be complete carnage.

What a situation we are in where complete carnage awaits when interest rates can no longer be kept at emergency 300year lows?

It's pretty obvious that when red alert was flashing in 07/08 the extreme measures of almost zero interest rates could not last......

So is the red alert emergency still on? Or are we supposed to believe the worst is behind us and green shoots are on the horizon?

If the red alert emergency is behind us the the uk and USA will start to raise rates back to normal levels.

The us has started the uk will follow in 2016

chucknorris

AG47 wrote: »

It's pretty obvious that when red alert was flashing in 07/08 the extreme measures of almost zero interest rates could not last......

Could not last? We are coming to to 7 years, and still counting! I had originally hoped for about 3 years, so I am well pleased. Even when they start to creep up, it is going to take some time to get back up to 5%, and at 5% I was making good profits.

wotsthat

chucknorris wrote: »

Could not last? We are coming to to 7 years, and still counting! I had originally hoped for about 3 years, so I am well pleased. Even when they start to creep up, it is going to take some time to get back up to 5%, and at 5% I was making good profits.

I thought it would be even less because the GFC was being overblown! I even put my money where my mouth was and topped up on banking shares.

Luckily I was so so wrong that my debt servicing costs dropped off a cliff for longer than I could ever have dreamt off. Even better FTB's were excluded from the mortgage market so I was able to buy a holiday home with much less competition.

I still keep the Lloyds shares to remind me I'm (a) not as clever as I think I am and (b) to get rich slowly. However, never could I have hoped to do so well from being so wrong.

Generali

cells wrote: »

are you suggesting buying life insurance is possibly a good way of investing? note im not saying it is or isnt Ive just not thought of it that way before

Not really because the costs loaded on to you are too high. You end up paying the costs and profits of both the insurance company and the asset manager out of your money.

In some countries there are tax breaks for life assurance which makes it a better deal. I only pay 15% tax on the income I use to pay for life assurance for example .

mwpt

wotsthat wrote: »

I thought it would be even less because the GFC was being overblown! I even put my money where my mouth was and topped up on banking shares.

Luckily I was so so wrong that my debt servicing costs dropped off a cliff for longer than I could ever have dreamt off. Even better FTB's were excluded from the mortgage market so I was able to buy a holiday home with much less competition.

Ah. I always wondered why you were so pro excessive HPI. Double homes, makes sense.

wotsthat

mwpt wrote: »

Ah. I always wondered why you were so pro excessive HPI. Double homes, makes sense.

Did you not know I'd got a holiday home? I distinctly remember bragging about it on more than one occasion

You're still wrong though. I've lived like a good little bear and my main house is quite a lot smaller than I deserve. The retirement plan is to buy a house which costs more than the sum of the the two places I own.

Therefore, I'm pro excessive HPI in the midlands and all about a crash for the South-West. However there's not a lot I can do about it so I suppose I'll have to deal with the circumstances as they present themselves rather than trying to make a faux moral argument about what they should be.

chucknorris

wotsthat wrote: »

The retirement plan is to buy a house which costs more than the sum of the the two places I own.

If you had not have said that, I would have said it for you, you've always been very consistent about that plan.

mwpt

wotsthat wrote: »

Did you not know I'd got a holiday home? I distinctly remember bragging about it on more than one occasion

You're still wrong though. I've lived like a good little bear and my main house is quite a lot smaller than I deserve. The retirement plan is to buy a house which costs more than the sum of the the two places I own.

Fair enough, and no, I did not know about your second home or plans. I too live in a house smaller and cheaper than I could afford. My plan is to make hay while the sun shines with my career in London, with plans to move out, or even abroad (again) at some future point. Weirdly we disagree on a lot but our actions (aside from holiday house) seem to be similar.

antrobus

cells wrote: »

...You can't buy life insurance of x for any less than x...

Oh, good grief! So we now have to add 'life insurance' to the ever-lengthening list of things you don't understand?:rotfl: