Investing in property, or not?

lionel_hutz

Have been reading through some of the other threads on here as well as on the web about buying a property to let it out. I can see that the tax benefits are a hinderance to this so my question is:
I own my own home outright and am looking to invest my extra income. Do you think I’d be better to save up any extra income for the next 7-10 years and buy a property for cash with the intention to let it out OR invest my extra income each month into stocks and shares or something along those lines?

Ozzuk

Do you mean save for 7-10 years then buy? Saving rates are terrible at the moment, I'd probably spread the risk, save some in the best account I could get by locking some funds away, then trade in an ISA, maybe trade out of ISA as well if you have that much surplus. Assess your position in a few years.

AnotherJoe

lionel_hutz wrote: »

Have been reading through some of the other threads on here as well as on the web about buying a property to let it out. I can see that the tax benefits are a hinderance to this so my question is:
I own my own home outright and am looking to invest my extra income. Do you think I’d be better to save up any extra income for the next 7-10 years and buy a property for cash with the intention to let it out OR invest my extra income each month into stocks and shares or something along those lines?

The latter especially within a pension if you are a high rate taxpayer.

00ec25

no one can predict how "investments" will perform over the next 7 - 10 years

your question is impossible to answer other than to say: never let the tax tail wag the dog.

Don't base investment decisions on how profits are taxed, tax rules change and without profits there is no tax. I accept however that in respect of leveraged property and being a higher rate tax payer, the mortgage interest rules do significantly skew the position. But not enough to base a decision on of property versus stock trading.

G_M

Why not do both?

7-10 years is a reasonable time-frame for investments. Towards the end of that time

a) review your property business plan and decide if it is attractive , in light of property prices, rental market, tax regime etc at that time, and

b) pick a moment when the market, and your investment funds, are high (ie not just after a crash!), and sell with a view to moving into BTL

lionel_hutz

AnotherJoe wrote: »

The latter especially within a pension if you are a high rate taxpayer.

I am a higher rate tax payer, have had a pension for about 10 years that input £500 per month into but am not that confident it’ll be able to support me when I retire, am now 43, so looking for ways to supplement my pension when I retire.

AnotherJoe

lionel_hutz wrote: »

I am a higher rate tax payer, have had a pension for about 10 years that input £500 per month into but am not that confident it’ll be able to support me when I retire, am now 43, so looking for ways to supplement my pension when I retire.

Putting more money into your pension would seem to be the obvious answer so it doesn't need as much supplementing !?!

For every £500 you put in its only costing you £300 after tax relief possibly less if your employer does salary sacrifice. Take it out and you'll get £425 after tax assuming you are on basic rate then. So thats £300 -> £425.

You aren't going to get that sort of return on property.