Should I sell the house, its complicated?

Anais101

Hello All,
I live with my husband in a house mortgage free (in my name only). My husband and I have a joint mortgage on our original house - Mortgage left is £98,000 and value is approximately £320,000. At the moment our son is living in it, it has 4 bedrooms and he pays us £500 pcm, it is too big for just one person. I could get at least £1000 pcm if rented out to a family. He would find it hard to get a mortgage on his own with out help for a deposit.
We are not making use of our assets and we are not high earners so all our money is held in the properties. I do not want to sell the house we live in.
Should we:
Sell the other house and with the extra cash, give him a deposit for a flat?
Rent the house out that he lives in, then with the extra rent each month, use this to take out a new mortgage on a flat?
I am not very knowledgeable on Mortgages and would we be looking at a lot of capital gains tax if I sold the house? Would it even be worth taking on an extra mortgage as we would be taxed on this and it may be classed as a buy to let or a third home? I am finding it all quite confusing and wondered, who should I go to for advice, eg a Mortgage broker or accountant? What would you do?
Thank You for reading!

getmore4less

Could your son get lodgers?

tlc678910

Hi,
I think one of the main factors to influence what you should do is what is your goal/ what do you want and need financially and what does your son want? Do you have other children - it would be important to be fair to them if you do.

You have mentioned you are mortgage free but describe yourself as not high earners. Is your income enough to meet your needs and wants and will your pension also be enough? If you are happy with your income and expect to be comfortable with your pension and don't want need the money from the house then your goal might be to help your son (and any other children) onto the housing ladder.

If you do feel you need money from the property are you after a lump sum boost to your finances (which would indicate selling up) or a steady stream of income for the long term (continuing to rent out the property whether to your son - perhaps with lodgers to boost the income as previously suggested) or to another tenant.

Assuming you can't afford to not benefit commercially from the house in the future you could suggest to your son that he could continue to rent at £500 but gets lodgers (where he could get up to £7,500 on the rent a room scheme) and uses this money to save a deposit for his own place? You could work with him to devise a realistic timescale and then when he moves on rent out commercially.

Just as an aside I assume that you know that even though it is your son renting you should be declaring and paying tax on rental income. Because of this if you don't need the money from the rental it would probably be better to get him set up in his own place as no tax to pay on his own housing payments then. If he wants to stay in your house and you are happy for him to he could buy it from you with a private mortgage.

The capital gains you will owe depends how long you have not lived in the property compared to how long you have owned it and and how much you paid versus value now. (Less allowances)

Tlc