Selling Up And Renting???

STRAWB

Hi
I am going to sell my house which i am hoping to clear £200,000 to put in the bank and with the interest rent a home instead for the next couple of years.Can anyone give me advice on doing this for example taxes i might incur nad the best place to invest the money??
Thanks

Doozergirl

If it is the house that you live in - your main residence, then there is no tax to pay on the proceeds.

As for investing,well, there are articles on the main site with the best savings accounts. And a board too

dolce_vita

If this is your primary residence you will not pay tax on any profits you make.

If you intend buying again in a couple of years then the money needs to be put somewhere safe (not the stock market).
If you haven't already done so, put 3k into a cash isa and spread the rest around several high interest savings accounts (check the savings articles on this site)

STRAWB

Another quick question i know i will get taxed on my interest through the bank however as i am self employed will this be classed as a income and have to declare the interest to the taxman?

STRAWB

I really wanted a account where i could put the whole amount in and get interest monthly is this possible and also what sort of rate would i be looking at?

Lavendyr

Strawb, have a look at Martin's main Savings & Investment articles (links at the top of the page) to get an idea of the best saving accounts. If you want investment advice on investing that kind of money you should see an independent financial adviser, but you could ask over on the Savings & Investments forums. I'd suggest Icesave as a decent one as it's a reliable bank, easy online access, good interest rate and you can have the interest paid monthly into a different bank account.

The reason it's advised to spread your money across different accounts is that if a bank goes down, you are only guaranteed the first £35,000 of any of your savings held by that bank - so if you put £200k in one bank and that bank collapsed, you'd be stuffed as you'd only get back £35,000 of your money. So it's most sensible to save with a range of institutions, not just one.

If you'd work out as a higher-rate taxpayer based on your income plus interest, you might consider the NS&I Inflation-linked saving certificates for £15k of your money, as these are tax-free and offer a good rate of interest. However you can't have this interest paid monthly.

mlz1413

just a thought but if your putting 200k into say a 6% account that's £1000 pm interest gross, less tax at 22% is £780pm nett.

If your going to spend a large chunk on rent, say £500pm, would you not be better to down size? spending say £100k on smaller place no mortgage and then getting £390 pm interest on surplus £100k?

STRAWB

Not really a option as we need 3 bedroom and as we live in somerset we would not get alot for 100k if anything at all. So is 6% the best i am looking at for £200,000

dolce_vita

STRAWB wrote: »

Not really a option as we need 3 bedroom and as we live in somerset we would not get alot for 100k if anything at all. So is 6% the best i am looking at for £200,000

If you mean saving the money, yes 6% is about what you could get.

If you mean investing it, well, that depends on a lot of things, including your attitude to risk.

You could make a hell of a lot more than 6%..........

.............but you could lose the lot.

mlz1413

mine were simple sums used to ask a question.

I think lavendyr's advise be best. This website gives a good view of what's on offer and you can decide if you want to constantly swap money to the best account or settle with one bank.

Pukeko

Hi Strawb,

I have been reading about just this sort of thing lately:

http://millionairemommynextdoor.blogspot.com/search/label/About%20Me

This lady is in America but she advocates selling up and renting and investing your profits. She sold her (huge...) home and invested mostly in shares I think. Well she's a millionaire now, retired at 40, so maybe there's something in it... :think: