House Inheritance

Packerman

I am in the process of inheriting my mothers house due to her passing & I'm thinking of keeping it for the benefit of the rental income.

I am wondering other than the Capital Gains Tax that I'll have to pay when I do sell the property I was wonder what the tax liability will be for me? The Rental value has been estimated at £1100 PCM. If I earn the £13,200 over the year I will be well over the 40% threshold

I am a married man earning not too far away from the 40% tax bracket.

Any help will be greatly received

camptownraces

You will be liable for income tax on the profits from the letting, which may push you into the 40% band. (It sounds as if the place will be mortgage free, so no need to worry about changes to mortgage interest relief).

When the place is eventually sold, you will be liable for the capital gain on the increase in value between the date of sale and the date you acquired this inheritance. Who knows when and what that might amount to.

Ms_Chocaholic

Do you know of everything that's involved being a landlord?

Packerman

I do not have any idea of whats involved in being a landlord. I was thinking of going with a Letting Agency to do the day to day running of the property.

xylophone

https://www.gov.uk/renting-out-a-property/landlord-responsibilities

[Deleted User]

If nothing else read this https://forums.moneysavingexpert.com/discussion/comment/41155280#Comment_41155280

Particularly G_Ms post.

If you want to preserve your inheritence, I'd highly recommend you know what to do. Letting Agencies aren't always professional and tenants need more research than purely a LL reference (can be misleading if the LL wants to get rid of a bad tenant) and a basic credit check (which will only show up CCJ's and bankruptcy, not how reliable a tenant is with finances).

If you don't want to do this, I'd highly recommend selling the property.

tom9980

Packerman wrote: »

I do not have any idea of whats involved in being a landlord. I was thinking of going with a Letting Agency to do the day to day running of the property.

if you are not willing to learn everything about being a landlord and doing everything yourself i would suggest that is unfair on the tenant.

Rather than giving an agent a big slice of that income first to an agent while still being legally responsible for their mistakes you should sell and invest the cash in a wide portfolio of stocks and shares using an isa wrapper.

Do remember you will be giving mr osbourne a fair chunk too if you are borderline 40% now then another 10k income means you will only be making 6k off an asset I'd guess is worth £300k which is a very poor 2% yield.

Marvel1

Packerman wrote: »

I do not have any idea of whats involved in being a landlord. I was thinking of going with a Letting Agency to do the day to day running of the property.

I would still read up on what a landlord is supppse to do and not, and tenents rights, because even though the agent is running it, the responsibility is still on you e.g. repairs, protection of deposit.

chanz4

trust me its not fun, we are currently inheriting x3 propertys and its no fun and games

SevenOfNine

We considered this when inheriting our son's house recently. Being a landlord is a job in itself, not necessarily all it's cracked up to be, not necessarily enough money to be made with one property, particularly with your tax level & agents fees you plan to shell out. Don't underestimate the volume of crap tenants out there!

The 2 people I know who do it only use the letting agency to vet/find tenants & gather rent, they don't do the property maintenance very well (& it's more expensive) so both sort all that out themselves.

Capital gains wasn't an issue when our neighbour sold her buy to let house. She sold her own home first & moved into the little buy to let for a year, then sold it.

teddysmum

Have a look at some of the current tv shows about bad tenants (and landlords) and note that the bad tenants aren't necessarily 'the expected' . Some are 'good' long term residents, who are in good jobs, but suddenly decide not to pay up or move out.