Sell or Continue to rent it out?

Pixie5740

What kind of mortgage do you have? Is it a residential mortgage with consent to let, if so how long has consent been granted or is it a BTL mortgage?

I think you are too emotionally attached to this property to let it out.

SimpleMind

Pixie5740 wrote: »

What kind of mortgage do you have? Is it a residential mortgage with consent to let, if so how long has consent been granted or is it a BTL mortgage?

I think you are too emotionally attached to this property to let it out.

Hi Pixie I have a specific BTL mortgage. the property has been rented out for the last 6 years

Yes you are right in thinking I have an emotional attachment to the property. I lived at the flat for about 8 years and have a lot of history there.

This is also part of the reason why I think it may be good for me to let it go. but I don't want my emotions overrule what might be a very sound financial investment.

caronoel

SimpleMind wrote: »

I'd have to pay CGT. Property bought for about 130K, worth about 180K today, mortgage approx 100K

enough?

Re: CGT payable

You have owned the house for approx 13 years, of which 7 you lived in the property as your Principal Primary residence. This proportion of the gain will be tax free.

The last 18 months of ownership will also not be liable to tax

Assuming you sold tomorrow at £180k, and your fees to sell are £2k, your gross gain would be £48k.

Of this £48k, only 4.5 years of the 13 years of ownership would be subject to CGT giving you a taxable gain of just over £16,600.

As you had owned the house as your private residence, up to £40k of the gain is tax free. This is in addition to your annual exemption of £11,100.

So you are a long way off from worrying about CGT.

Details here:
https://www.gov.uk/tax-sell-home/let-out-part-of-home

POPPYOSCAR

caronoel wrote: »

Re: CGT payable

You have owned the house for approx 13 years, of which 7 you lived in the property as your Principal Primary residence. This proportion of the gain will be tax free.

The last 18 months of ownership will also not be liable to tax

Assuming you sold tomorrow at £180k, and your fees to sell are £2k, your gross gain would be £48k.

Of this £48k, only 4.5 years of the 13 years of ownership would be subject to CGT giving you a taxable gain of just over £16,600.

As you had owned the house as your private residence, up to £40k of the gain is tax free. This is in addition to your annual exemption of £11,100.

So you are a long way off from worrying about CGT.

Details here:
https://www.gov.uk/tax-sell-home/let-out-part-of-home

If the property is in joint names is that £40,000 per person?

booksurr

monkeyman1974 wrote: »

You should record a valuation from your move out date (for CGT purposes).

that is not how CGT works. The change in use has no impact at all on the value of the taxable gain. Yes it impacts what relief can be claimed, but relief is not based on an interim valuation like you seem to think is needed

booksurr

POPPYOSCAR wrote: »

If the property is in joint names is that £40,000 per person?

yes, it is not the property which is being taxed, it is the person. You have forgotten that we switched to individual taxation sometime ago so if the property is owned by 2 people then the gain is split between them according to their ownership portions and each is exposed to their own individual taxable gain

each person can claim both private residence relief and letting relief if they are individually entitled to do so. (A gifted share whilst married sets the original cost for the recipient, but does not gift a claim to PPR if the gift recipient has not personally lived there before final sale). Plus of course each gets their personal allowance

where a let property is owned by 2 people and has previously been the main residence of both of them the maximum possible combined relief is £102,200. (40 x 2 + 11.1 x 2)

booksurr

SimpleMind wrote: »

Hi Pixie I have a specific BTL mortgage. the property has been rented out for the last 6 years

Yes you are right in thinking I have an emotional attachment to the property. I lived at the flat for about 8 years and have a lot of history there.

This is also part of the reason why I think it may be good for me to let it go. but I don't want my emotions overrule what might be a very sound financial investment.

I am not going to vote in your poll since you have no idea whether your decision will be based on head or heart

you have not provided anywhere near enough info about your financial circumstances to evaluate if it is a long term investment for the head. You have however indicated your heart has problems. Kill 2 birds at once: go see a doctor for a heart checkup and have a brain scan to see what that shows? :rotfl:

POPPYOSCAR

booksurr wrote: »

yes, it is not the property which is being taxed, it is the person. You have forgotten that we switched to individual taxation sometime ago so if the property is owned by 2 people then the gain is split between them according to their ownership portions and each is exposed to their own individual taxable gain

each person can claim both private residence relief and letting relief if they are individually entitled to do so. (A gifted share whilst married sets the original cost for the recipient, but does not gift a claim to PPR if the gift recipient has not personally lived there before final sale). Plus of course each gets their personal allowance

where a property is owned by 2 people and has previously been the main residence of both of them the maximum possible combined relief is £102,200. (40 x 2 + 11.1 x 2)

Yes, I thought that was the case.

Thank you for confirming it.

SimpleMind

booksurr wrote: »

I am not going to vote in your poll since you have no idea whether your decision will be based on head or heart



you have not provided anywhere near enough info about your financial circumstances to evaluate if it is a long term investment for the head. You have however indicated your heart has problems. Kill 2 birds at once: go see a doctor for a heart checkup and have a brain scan to see what that shows? :rotfl:

of course I'm not going to provide a detailed breakdown of my finances for the world to see!! Frankly I think you'll find I quite clearly stated that I do have emotions (being human does that!) but did not want that to overrule a decision.

Perhaps you may need to go and see a robotics engineer to see if they can finally fit you up with an emotion chip, you may then have some understanding and compassion :P LOL

booksurr

SimpleMind wrote: »

of course I'm not going to provide a detailed breakdown of my finances for the world to see!! Frankly I think you'll find I quite clearly stated that I do have emotions (being human does that!) but did not want that to overrule a decision.

Perhaps you may need to go and see a robotics engineer to see if they can finally fit you up with an emotion chip, you may then have some understanding and compassion :P LOL

precisely my point, only you can answer your own questions and the fact you list 5/2 reasons for selling shows which way you want to go anyway, so a poll is irrelevant.

if you want non emotional reasons to counterpoint your 5 reasons for selling the property then that is an investment appraisal question for which full facts are required. It is not producing an income for you at the moment, so its only purpose is capital growth/preservation as part of your investment portfolio with a view to either having a paid off asset that will provide an income in the future (incl in retirement) or to realise a lump sum to fund retirement or something else in "the future". Time to do some number crunching.... for which emotion is not relevant so nothing is in danger of being over-ruled other than the fact you apparently want to reintroduce "compassion" for some strange reason into the assessment!