First time buy-to-let advice

overload99

I have always been interested in property and now my youngest is about to start school, I'm thinking of going for it having been a full-time Mum for the past 7 years. The basic details are as follows and figures are approximate:

House price - £85k
Deposit - £22k (parents £10k, brother £10k and me £2k)
Mortgage - £63k
Rental income - ca. £800-£1000 per calendar month

Managing the property will be my job and my only source of income. My brother has a normal job at the basic tax rate. He earns around £22k. My parents are both 75 years of age. They do not want a share in the house, they are just lending the money to my brother and I to get us started.

What I really want to know is the best way for us to do it from a tax point of view. Any tips or advice would be greatly appreciated.

anselld

Looks like you cannot afford it (parents lending £10k will not meet the deposit requirements).

Since you are not married (to your brother) you can decide how you you want to split the income (and tax) and it would be best to document that in a Deed of Trust to avoid argument.

The most tax efficient way would be for you to have the majority of income, but that is unlikely to make a sensible investment for your brother.

overload99

I should have explained that it would be me repaying the £10k from our parents so the deposit would be fairly even ca. 55% me and 45% my brother.

Nasqueron

Lenders do not look favourably on loans for deposits, it will affect how much they lend you

00ec25

you say it will be your only source of income, that does not mean it wil be your "job"

the implications of that are the profit you make from the property falls into a separate category called UK property income. That means it is not subject to national insurance so you will not get any state pension credits or other means tested credits. Thank carefully about that, you may be young but you have negligible income and no pension plan. You may for example want to pay voluntary NI (class 3) contributions. They are expensive.

capital0ne

Have you ever watched Tenants from Hell on CH5?

Please watch a few before you decide, letting a property isn't as simple as it seems from Housses under The Hammer!

You will need to consider tenants wrecking the house, not paying, subletting.

Then there's gas and electric safety certificates, deposit schemes, inurance, letting agent fees.

Responding to tenants requests, when CH breakdowns on Christmas eve! Plumbing faults, tenants do not care for your property like you would.

And then there is your annual tax return.

So I would invest in a nice balanced portfolio of stocks and shares, in an ISA (£20k each year) or in a SIPP for your retirement.

Whatever you decide, good luck

enator

ruthieb77 wrote: »

House price - £85k
Deposit - £22k (parents £10k, brother £10k and me £2k)
Mortgage - £63k
Rental income - ca. £800-£1000 per calendar month

Where on earth in the country can you buy a house for £85k and bang it out at £1k per month?

I have a rental house in a very pleasant part of Cheshire, catchment area for outstanding primary and secondary schools that cost £160k and it rents out for £695.

Please let us know where this magical area is :rotfl:

A_Nice_Englishman

If I were you I'd look for a job with a letting agent, learn the trade that way and see if it's a business you want to be in.

Badger50

If you must dabble in property forget letting and buy something cheap which is structurally sound but run down and needing a complete makeover. Do it up (your job) and sell it . And repeat. You can only do it once or twice as a householder, if you do it serially HMRC treats it as trading which is subject to a different tax regime.

Cakeguts

How did your research come up with £800 to £1000 pcm on an £85k house? Did you guess? My research tells me that you are only going to get £350 to £450 for this house. No one pays that kind of money to live in a house costing £85k.

Red-Squirrel_2

You might be better looking for a job in the field that you are interested in. Something at a housing association or an estate agent perhaps?