Will £400,000 pay my rent?

Tudor_2

Hi all

I've virtually sold my house and will realise around £460,000 from the sale. Want to go into rented acc and hopefully get the interest to pay the monthly rent. (£1500)

What's the best way of achieving this? I've thought of putting the cash into wifes name (non-tax payer) but I'll only get up to her personal allowance (£4850), then have to pay 20% tax. Which is not great.

I can't afford to gamble with risky investments, as this is basically my home, turned into liquid cash. I can't afford to lose any of it.

Am I limited to just the best saving a/c on offer at present or is there another way to do this? I will need monthly interest too, so it pays the rent each month.

I'm not opposed to a little 'ducking and diving' where necessary, as long as it's 'sort of' ok.

Any help, much appreciated.

Tudor

dunstonh

Want to go into rented acc and hopefully get the interest to pay the monthly rent. (£1500)

You can make around £2000 gross from it.

What's the best way of achieving this? I've thought of putting the cash into wifes name (non-tax payer) but I'll only get up to her personal allowance (£4850), then have to pay 20% tax. Which is not great.

It would also knock out any age allowance if that is applicable.

I can't afford to gamble with risky investments, as this is basically my home, turned into liquid cash. I can't afford to lose any of it.

What do you mean by risky? Risk isnt on or off. Its a sliding scale from minimal through to extreme. Often people look at a risk scale of 1 to 10 when grading the amount of risk involved.

Putting that amount in a bank account comes with some risk so there is no risk free option.

grumbler

Tudor wrote:

I've thought of putting the cash into wifes name (non-tax payer) but I'll only get up to her personal allowance (£4850), then have to pay 20% tax. Which is not great.

AFAIK no tax for up to £4850, then 10% for next £2090, then 20%...

grumbler

Generally, if you sold your house for £460,000 interest income even from the full amount placed into no-risk saving accounts cannot be enough to pay your rent for a similar house. This is quite obvious: if you buy-to-let house your rental income must be higher than the interest income from the same amount investment into saving accounts (or interest on mortgage if borrowings are used for purchase). This is fair if a landlord does not expect the price of the house to rise. Who expects now?
Conclusion: your interest income generally could be enough to rent only considerably smaller or cheaper house.

Sorry if you know this and all this sounds too trivial…

blinko

well 500.000 at 5% will give you an annual income of £25,000 which net will be about £20,000

Tudor_2

Thanks for all this, the best rate I can seem to find is around 4.1% Net, which almost makes the £1500 I need.

I guess I'll have to make up the shortfall myself.

Thanx

Tudor_2

Sorry, should have said, I want to put £400,000 into savings and keep £60,000 back for actually using. I guess the £60k should go into an interest bearing a/c too. But would need instant access, so I guess the rate will be cr#p.

This would achieve around £1366 at a rate of 4.1% net.

Any more advice, anyone??

isasmurf

Tudor wrote:

What's the best way of achieving this? I've thought of putting the cash into wifes name (non-tax payer) but I'll only get up to her personal allowance (£4850), then have to pay 20% tax. Which is not great.

Erm, am I missing something? I assume you are a taxpayer. In which case isn't put it in your wifes name and getting £4895 interest tax free, and the next £2090 interest at 10% tax, better than paying 20% on it all as I assume you would if it was in your name. Obviously your wife will need to claim some of it back if it is her only income.

nrsql

>> I guess the £60k should go into an interest bearing a/c too. But would need instant access, so I guess the rate will be cr#p.

on-line saver accounts are instant access (ish - bit of time to transfer) - and you can get 5+% gross 4+% net.
see alliance & leicester, nationwide, ing.

Who is your current a/c with? It's probably worth having a bit in an on-line saver with them as the transfer shoud be same day.

I take it you are remembering to use up isa allowances.