Buy to let as investment

whitejohn

I'm living in my caravan and VERY happy, great scenery, no debts, just lots of fun. Only problem being no interest on my cash from house sale.

Didn't really want to get involved with buy to let but now looking like my best option? A small holiday let even better if I could find one?

There seems to be lots of flats coming on to the market now, probably due to the new regulations but would this affect me as it may be my primary home and not a second home?

I'm 68 with £150K to spend and in the long term have a nice residential home in mind so no desire to buy a property except as an investment.

Any suggestions, thanks

Guest101

As opposed to a hobby?

Anyway plenty you can buy outright in the north.

Holiday lets attract business rates so I'd avoid that.

Buy a semi, 3 bed, rent out to families with good references.

whitejohn

Yes, I'm in the north so it's possible to buy at that price.

Am I right in thinking it's my primary home so I'm in a better position regarding additional stamp duty and taxes?

MobileSaver

whitejohn wrote: »

Am I right in thinking it's my primary home

I'm confused, will this be a "buy to let" or a home for you to actually live in?

booksurr

whitejohn wrote: »

Am I right in thinking it's my primary home so I'm in a better position regarding additional stamp duty and taxes?

just because you only own one property does not make it your primary home unless you live in it. You cannot live in a property you have let out ! Anyway occupation is relevant only to capital gains Tax which is payable only when you sell the property. As you are 68 and appear to want to move from caravan to a residential (care) home I assume your idea is to have a property for a few years and then sell it when you need a cash lump sum?

That is rather a high risk investment strategy as you are relying on:
a) rent covering all your costs whilst owning it. Tenants leave and you have voids. Things break and need repairing. tenants trash places and cause damage in excess of any deposit you hold
b) it could be a short period before you need to cash in so you are very exposed to the housing market over a short term - never a good idea as housing is a 15 - 20 year investment, not a 5 - 10 year lottery gamble

If you do buy you would be selling a property you had never lived in so would be liable for CGT on the "gain" you made. ie selling price - purchase price - personal allowance (£11,100) = taxable gain x tax rate (at worst currently 28%) = tax payable on sale

you will not own 2 properties so will not be liable to the higher rate SDLT

enthusiasticsaver

If you are letting it out it is not your primary home. As someone else says capital gains tax only applies when you sell if you make a profit above exemption limit.

If you go for a buy to let you need to comply with new landlord regulations. You still need to pay stamp duty and declare rental income for tax purposes.

whitejohn

It will be the only property that I will own.

I will probably not live in the property.

I will probably let the property whilst I live in my caravan.

I will probably let the property when I finally move in to a residential home.

So is it my primary residence? No additional stamp duty? I don't know, it's not a second home?

I'm not doing it for a hobby, as I'm on state pension only I need the income towards campsite fees and the residential home when I finally move in there. (small studio flat, nothing plush)

booksurr

whitejohn wrote: »

So is it my primary residence

as we have already told you NO it is not, it is a let property that you do not live in so it cannot in any way, shape, form or mad thought, ever be your primary residence given you are not living in it

primary = only. yes you only own one property

residence = property in which you live. That means it is your "home", it is where your possessions are, it is where you return to after work or socialising, it is where friends expect to find you if they want to contact you. There is ancient case law which defines tests to establish if you reside there: you will fail every single one of them because you reside in your caravan, your tenants reside in your let property, it is their primary residence, not yours

is that clear enough?

seven-day-weekend

Your primary residence is the one you live in. i.e. your caravan.

whitejohn

Yes I agree with all of that thanks.

I did think it was a lot of hassle to buy and sell with all the fees involved and the inevitable wear and tear plus problems.

And I did genuinely think it would be my primary residence.

So back to maybe buying and selling a few objects as a bit of a hobby. No hassle and no tax to pay on the profit.

I spend more than I earn but the cash should last me out as I'll be having fewer holidays as I get older.

whitejohn

Yes thanks!