Selling old home versus investment

flopsy1973

Hi
I am looking to buy another house soon as family home and learned that I am going to be clobbered with more tax as I already own 1 house. This house is worth around 100-10k and I currently get 6k rental from it.
With me buying another house thinking is it worth selling this house to save the tax and invest that money. Surely I will get a 6k return from that and less hassle? What do others think on here or are there other things I could do ?

jimjames

When you say the rental income is £6k, is that after tax? Are you aware of the tax changes being implemented? Do you need more income or is long term value more important? Do you have a mortgage on the property? Investing via an ISA will be tax free but can only add £20k per year. Pension may give some tax benefits.

All of these will have an impact on the best options

MarkBargain

It seems a decent yield to me, over 5% in rent plus your house value will probably increase over time. If the tenants are good, why not keep it going? Selling it would take time, incur costs and possibly put those tenants out of a home unless it sells to an investor.

LHW99

Have you calculated the extra tax (on 2nd purchase) if you don't sell, versus estate agents / house clearing costs if you do?

flopsy1973

There is 9k left on mortgage and I could pay that off. The long term value has been more important . The 6k is what I get! what tax changes are changing? Yes I need to work out fees for selling versus extra tax for the second home. That came as big shock how much tax is being charged for second homes . Any way round that?

xylophone

Have you declared the rental income to HMRC?

https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income

Had you considered CGT implications on sale of the property you are renting out?

https://www.gov.uk/capital-gains-tax

Re SDLT https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

MarkBargain

flopsy1973 wrote: »

There is 9k left on mortgage and I could pay that off. The long term value has been more important . The 6k is what I get! what tax changes are changing? Yes I need to work out fees for selling versus extra tax for the second home. That came as big shock how much tax is being charged for second homes . Any way round that?

You write the tax is a shock, but it is 3% on top or normal stamp duty rates so a few months' rent should pay it off surely unless your new house is much more expensive?

https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

Thrugelmir

Would the released equity reduce the amount you need to borrow for the purchase of the new property and result in a lower LTV. Opening more doors in terms of a lower interest rate. .

flopsy1973

The property I'm looking to buy is around the 250k and no mortgage on it . I was thinking of my old house as a long term investment so didn't think about the CGT. Would it not make more sense to sell that now so that I don't pay CGT and will have lower stamp duty. Would I be able to buy and sell property the same time swapping homes to avoid CGT?
But ultimately am I going to get the same income investing this money if I sell ?

flopsy1973

Any thoughts on this to see if it worth selling .

flopsy1973

flopsy1973 wrote: »

Any thoughts on this to see if it worth selling .

Any ideas on the above