Urgent Advice

Caravan_of_Love

Hi guys,

Looking for some advice if possible please. Long story short I have bought another property in my street, a 4 bedroom at the moment I am in a 2 bedroom, due to my on/off girlfriend coming back to me and we were planning to make a steady go of it as we are now both 35.

The obvious happened and I am now left with this deal about to go through and will have two properties in the one street on my hands. I got the property for 5k under the home report value which seems fairly decent as the area is pretty desirable and everything goes fairly quickly, although it would require an upgrade kitchen/bathroom if I am to live in it.

My plan/idea is to rent the new 4 bed till I can find out what the hell is going in my life. Issue is the numbers: Mortgage is 720 and can get about 900 in rent, capital repayment mortgage, but after tax etc I think I would be down to around the 500 mark. I did a bit of reading up about the limited company in but was not sure if this would be viable as it is only going to be one property and landed on my door accidentally so to speak.

Basically I am just looking to find the most tax efficient solution to my problem. I am already in the 40% bracket so this is not going to push me up any further from that point of view.

Aside from the obvious 'you idiot' comments any advice would be greatly appreciated!

Cheers

theartfullodger

On this day of all days perhaps we should all consider the view that a key element of patriotism is paying your fairly due taxes rather than concentrating on wriggling out of such obligations:

Best wishes to all, including those who disagree with me.

Caravan_of_Love

I didn't ask to avoid tax, I asked for the most tax efficient way.

G_M

I don't fully understand.

Caravan_of_Love wrote: »

....I have bought another property in my street, a 4 bedroom at the moment I am in a 2 bedroom,....
Were you always planning to keep the 2nd property, or were you planning to sell the 2 bed house?
1) if the former, nothing has changed - you planned on having 2 properties, and you will have 2 properties
2) if the latter, presumably you have a buyer for the 2 bed? Why not carry on and sell, ending up with just a single, 4 bed property?
3) or if that's too big/unaffordable without the gf, then keep the 2 bed and pull out of the puchase of the 4 bed (you say "deal about to go through" so unclear if you have Exchanged or not - but if you have I'd assume you've also Exchanged on selling the 2 bed....)

Or am I missing something?
...I am now left with this deal about to go through and will have two properties...

My plan/idea is to rent the new 4 bed ... Issue is the numbers: Mortgage is 720 and can get about 900 in rent, capital repayment mortgage, but after tax etc I think I would be down to around the 500 mark. I did a bit of reading up about the limited company in but was not sure if this would be viable as it is only going to be one property....
Ltd company not the way to go

Basically I am just looking to find the most tax efficient solution to my problem. I am already in the 40% bracket so this is not going to push me up any further from that point of view.
But is going to be expensive tax-wise

Aside from the obvious 'you idiot' comments any advice would be greatly appreciated!

You idiot.

This is not a project to take on. If you've not yet Exchanged, then pull out. If you have Exchanged, then re-sell. Trouble with that is that many lenders won't lend on a property that is being re-sold within 6 months, so your buyers will be restricted to those with cash, or tthose willing and able to shop around for a lender. This will affect market value.

The other confusing aspect here (to me) is that I've assumed you and gf were going to jointly buy this larger house together (and this joint purchase made it affordable).

In which case, if you have Exchanged, presumably her signature is also on the contract, so she cannot just walk away.........

Back to if you've not Exchanged and she has 'just walked away'. So don't Exchange.

cjmillsnun

I'm guessing that with you mentioning the home report value, you are in Scotland. If you've not concluded the missives, walk. There will be other properties once your GF has made up her mind.

If you have concluded, Is the 4 bed habitable? If so, move in and put the 2 bed on the market. Do it up whilst you are living in it.

Worst case then is it take you 6 months or so to do up, and you then have to sell. Which is fine as you will be able to sell to buyers who need mortgages.

Caravan_of_Love

G_M wrote: »

I don't fully understand.

You idiot.

This is not a project to take on. If you've not yet Exchanged, then pull out. If you have Exchanged, then re-sell. Trouble with that is that many lenders won't lend on a property that is being re-sold within 6 months, so your buyers will be restricted to those with cash, or tthose willing and able to shop around for a lender. This will affect market value.

The other confusing aspect here (to me) is that I've assumed you and gf were going to jointly buy this larger house together (and this joint purchase made it affordable).

In which case, if you have Exchanged, presumably her signature is also on the contract, so she cannot just walk away.........

Back to if you've not Exchanged and she has 'just walked away'. So don't Exchange.

Thanks for the reply. My bad for not being clear about that part, the original plan was to rent the existing 2 bed as I only have 7 years left on the mortgage, less if I throw cash at it every year. The mortgage/s are solely in my name and she is not involved from that standpoint.

My idea/thought, not in an ideal place just now, was to perhaps take the 100/150 per month hit on the new one and rent it out as I would be chipping away at the capital anyway and then in 2 years time could reevaluate. 100-150 outlay per month against a property capital does not seem such a bad deal although agreed not optimal and planned out.

The missives have not been exchanged but getting pushed for next week. I guess part of me wants to do it on the chance she comes back around.

Yes we are talking Scotland housing market. The second home tax took it up the home report value so kind of even itself out from that respect.

Caravan_of_Love

cjmillsnun wrote: »

I'm guessing that with you mentioning the home report value, you are in Scotland. If you've not concluded the missives, walk. There will be other properties once your GF has made up her mind.

If you have concluded, Is the 4 bed habitable? If so, move in and put the 2 bed on the market. Do it up whilst you are living in it.

Worst case then is it take you 6 months or so to do up, and you then have to sell. Which is fine as you will be able to sell to buyers who need mortgages.

Yes in Scotland.

Habitable yes, would it be something I would look at and say 'OK let's go' absolutely not. Kitchen has not been touched in 18 years for example and is looking worn.

Doing it up while living in it is an option, agreed.

p00hsticks

Caravan_of_Love wrote: »

My plan/idea is to rent the new 4 bed till I can find out what the hell is going in my life. Issue is the numbers: Mortgage is 720 and can get about 900 in rent, capital repayment mortgage, but after tax etc I think I would be down to around the 500 mark.

So is that a Buy to let mortgage ? Your lender isn't going to be impressed if you've got a residential mortgage and are immediately going to let it out.

Caravan_of_Love

p00hsticks wrote: »

So is that a Buy to let mortgage ? Your lender isn't going to be impressed if you've got a residential mortgage and are immediately going to let it out.

Would apply for permission to let, can't see it being an issue.

Caravan_of_Love

00ec25 wrote: »

as you appear not to want to discuss tax I have deleted my reply

Sorry? I said I wasn't looking to scam the system.

cjmillsnun

If you've not concluded, walk. You would then be only out the fees and legal costs you have sunk into it so far.