Sell or stay (rental property)

Bubbly952

Hi
My first post and I hope i can get advise/opinions from landlords.
I have a property that im considering to sell due to new tax implications (heavy btl mortgage). The property market seems unstable & a lot of properties are still for sale almost 9 months later.
Im not sure if brexit is also a reason?
Any advise would be most appreciated.
Thank you

anselld

Difficult to advise with no figures.

If this was ever a good investment then it seems unlikely that the current tax changes alone would tip it the other way.

lisyloo

What’s the profit you’re making on the btl?
Do you have a tenant current?
Are they good and likely to stay?

Properties are not a liquid asset.
We sold ours very quickly in september as someone wanted that particular type, but in general the market is slow and some people are delaying due to brexit.

Would you be selling with a sitting tenant?

AnotherJoe

Let me translate your post for you OP;
I have a property worth ?? And the rent is ?? On which the profit per year is ?? And the CGT were I to sell it at ?? would be ?? And when the new tax laws come in the profit will change to ?? And if I sold it I'd do ?? with the money includ8ng bumping my pension which is ?? Up to ??

What's your advice?

Bubbly952

Hi
What’s the profit you’re making on the btl?
Profit £8,500 but mortgage is £8,900

Do you have a tenant current?
Are they good and likely to stay?
Im not sure they want to stay as may want to return to Lancashire.

The property was £465 (average valuation by 3 agents in Sept 2017) and now 2 agents said £370-385 and they are struggling to push their properties.

I have some savings (£20k) but it will only reduce yearly mortgage to £8, 200

AnotherJoe

Bubbly952 wrote: »

Hi
What’s the profit you’re making on the btl?
Profit £8,500 but mortgage is £8,900
(

Do you mean that rental income minus expenses minus tax minus mortage leaves you with £8,500?

Bubbly952

I have to pay tax on the mortgage (£8900) and then on my profit (£8500) so unfortunately i lose a lot of my btl profit.

AnotherJoe

Bubbly952 wrote: »

I have to pay tax on the mortgage (£8900) and then on my profit (£8500) so unfortunately i lose a lot of my btl profit.

Your profit is after all costs.
So its still not clear to me what you mean by "profit". Think of it like take home pay after income tax and NI.
If your "Profit" is £8500 but you have to pay (say) £3k tax, then actually your profit is £5,500.

So whats left after you take your rental income and then deduct all costs (all taxes etc) from it.

Bubbly952

Tax on mortgage £8900
£1780

Tax on property profit after allowable taxes deducted £8500
= £3400

Total tax to pay: £1780 + £3400
= £5180

So what i make on this btl is £3320
If my btl had NO mortgage it would only be £3400

In 2018/19 tax year mortgages are subject to 75% being taxable and i am a 40% tax payer of this amount

pramsay13

You already pay your mortgage. How can you pay tax on it as well?

Alice_Lewis

As for me, poor market perspectives is the reason to buy, not to sell. Today we can buy at low prices and in 5 years the market will recover and we'll get our profit, I believe in that. Especially if we are talking about Brexit.