To let or not to let

schizometric

We are thinking of moving house and area as I’ve been offered a job in another part of the country. This is an issue of its own as I can’t work out whether it’s worth the upheaval (not a promotion) but that’s an issue for another day.

We have a house in Birmingham which is currently mortgaged on a good interest rate. It has exit fees and we are due to renew the mortgage next March when it moves to svr. We can also change to buy to let at 1%.
A big train line is being built within a 10 min walk in the next two years.

Question is, would it be better to sell now,cut losses with exit fee and keep the money we get ready to put down on a new property when we are ready in the new location?
Or better to keep the property -let it out and suck up additional 1% added to change to buy to let for the year.

I can see on HMRC that there can be a tax implication for buy to let when selling? Which we definitely do intend to do?

I should add that we currently own about 1/3 of the house in total and the value has risen by about 1/5th of the cost of the house

Also apologies if this post seems stupid. I’ve tried to do some research, just seem to be endless factors to consider!

Pixie5740

schizometric wrote: »

We are thinking of moving house and area as I’ve been offered a job in another part of the country. This is an issue of its own as I can’t work out whether it’s worth the upheaval (not a promotion) but that’s an issue for another day.

We have a house in Birmingham which is currently mortgaged on a good interest rate. It has exit fees and we are due to renew the mortgage next March when it moves to svr. We can also change to buy to let at 1%.
A big train line is being built within a 10 min walk in the next two years.

Question is, would it be better to sell now,cut losses with exit fee and keep the money we get ready to put down on a new property when we are ready in the new location?
Or better to keep the property -let it out and suck up additional 1% added to change to buy to let for the year.

I can see on HMRC that there can be a tax implication for buy to let when selling? Which we definitely do intend to do?

I should add that we currently own about 1/3 of the house in total and the value has risen by about 1/5th of the cost of the house

Also apologies if this post seems stupid. I’ve tried to do some research, just seem to be endless factors to consider!

What are the HMRC tax implications for BTL when selling?

If you only own 1/3 of the property, who owns the other 2/3?

Have you read the Tenancies in England/Wales sticky at the top of this board?

schizometric

Poor wording sorry, we have a mortgage worth 2/3 the cost of the property.

Gov.uk website suggests when selling a buy to let property you have to pay capital gains tax?

kim81

If you can make it work I'd rent it out. 2 houses are better than one!

AdrianC

schizometric wrote: »

Gov.uk website suggests when selling a buy to let property you have to pay capital gains tax?

Yes, but not on any growth over the period you lived there. Only on the period you were letting it.





Can you afford to buy in the area you're moving to, without selling this property?
Even with the +3% SDLT?
Can your finances withstand the costs of evicting non-paying tenants from the let, leaving it trashed, with the mortgage on it still needing to be paid?
What yield will it bring in, and how will the monthly income compare to the outgoings for management/mortgage/maintenance/legal obligations/etc?

p00hsticks

schizometric wrote: »

Gov.uk website suggests when selling a buy to let property you have to pay capital gains tax?

You may have to pay CGT - it will depend on how much the value of the proerty has risen from when you bought it and the amount of time that you let it out compared with the time you have it as your main residence. Often once you've done the calculations and taken into account the fact that you have a CGT allowance of £11,700 (each, if it's jointly owned) and that selling costs can be deducted, you'll find that there is nothing to actually pay.


However, you will pay an extra 3% Stamp duty on any new property you buy if retaining this one.

p00hsticks

AdrianC wrote: »

Yes, but not on any growth over the period you lived there. Only on the period you were letting it.

Sort of - the growth is averaged over the whole period you own the house, but then the only the fraction of the time you weren't living in the house as your PPR (less the final 18 months) is considered for CGT purposes

AdrianC

Yes, I was just (over-)simplifying a bit...

Socrat

I would do some research on the potential value of the property once you are ready to buy another and go from there. If prices are on the rise and you can reasonably expect an increase in value in that time, it's worth hanging onto it. Do bear in mind though that if you do rent it out, even with the greatest of tenants in , you will most likely have to redecorate (if not do any other work) before sale. Take it all into account.
If the area is decreasing in value, I would sell now and probably invest the money in something like P2P lending. Not being in a chain will put you in a much better position when it comes to buying and would save you a bit more if you were to do P2P.

Marvel1

Before starting the business, read everything by G_M about being a landlord:

https://forums.moneysavingexpert.com/discussion/5180214

G_M

HS2?

10 minutes walk = how close? I assume HS2 are not offering you compo (or you'd have mentioned it?) so not that close - but will there be a noise issue affecting future value? Though most buyers wi even now will consider that if it IS an issue (I'm buying a property and HS2 proximity came up).