2 Houses... RENT? SALE? OTHER?

Confused.1978

First thing is first, we are based in Northern Ireland if that changes things....

My partner and I have been living in her house for some time now and we have made the decision that we want to buy somewhere of our own together. We both own our own houses (with payments left of each mortgage) and want a bit of advice as to where to go. I will list all the details that I think you might need to know below. I am currently renting out my house to my daughter and her partner and am making no profit on it as they are simply paying the mortgage and rates. My partner and I are living in her house and we are splitting the cost of her mortgage between us. I am self employed with no pension set up and my partner is employed with a pension once she retires in 27 years time (so we have time enough yet :rotfl:)

What we are wanting advice on is what options we have ?

1- Do we sell both houses and put the money made from the sales together as a huge deposit on the new house?
2- Do we rent both houses out (but as a profit in each)?
3- Do we sell one of the houses and join up a mortgage for the second house and rent it out ?


My details...
40 years old
Self Employed (15 years)
Roughly £25'000 income
£30'000 equity on my house with 13 years left on mortgage


My Partner...
41 years old
Employed
Roughly £32'000 income
£65'000 equity on her house with 13 years left on mortgage

G_M

Confused.1978 wrote: »

........ I am currently renting out my house to my daughter and her partner and am making no profit on it as they are simply paying the mortgage and rates. ....

Just on this point, I trust you are declaring the rent to HMRC? The fact that you 'make no profit' is irrelevant - you are receiving rent (which happens to be going towards your mortgage).

As a landlord, you should be complying with all the relevant landlord /tenant leglislation (as well as tax responsibilities) whatever that is in N Ireland.


As for which option is best for you, well that is a matter of preference and personalcircumstance eg
* do you want a big expensive home or asmaller less expensive?
* do you have other commitments?
* do you plan other commtments (eg children)?
* have you done the maths esp with regards to realistic leting budgets, and tax?

da_rule

Some things for you to think about:

1) If you keep the houses you’ll have to pay the higher rate of stamp duty when you purchase your new place.
2) You’ll have to either switch the mortgages on your old places to BTL or get consent to let if you’re in a fixed term.
3) You’ll become landlords, with all the risks and expenses that entails (read G_M’s excellent sticky for an overview although some of the bits are slightly different for NI).
4) You’ll each be responsible for servicing the mortgages on your existing properties which may make affordability for a new mortgage challenging.
5) You’ll have income tax liability for the rental income as well as potential capital gains tax liability when you do come to sell the rental properties.

Personally, I would get rid of both properties. I’d put some of the money towards a deposit for a nice house then put the rest into a secure bond or some other type of investment product. Or, in your case OP, I would also be looking at how much I could pay into a pension pot so that you get the benefit of a pension but also the relevant tax relief.