Advice please

Essex22011

Hiya just after some thoughts/ advice

My mum is gifting me 150k. I plan to put 50k split between children's savings/ emergency fund/ debt repayment and home improvement.

Bit of background- I currently live with my partner (30k salary) and myself (45k salary). We have a 4-year-old and one on the way.
We own a property worth £465k with a balance OS of £328k mortgage.

My question is would you invest this into a buy-to-let property, or would you pay off your mortgage (current interest rate of 1.99%).

She is also gifting another property which has around £130k equity in it.

My thoughts are to use the 100k to pay off my mortgage will save approx. 90k interest and keep the buy to let property?

getmore4less

Is the other property mortgage free and worth £130k?

Has she done the CGT calculations if she does not live in it?

You could get your property to a better LTV and get a better rate although 1.99% is OK


If going into the letting business with one property(the gifted one) then you could leverage the work/effort on doing that with a second property.

Have you done the business plan for the letting business with the tax changes you could be pushing 40% tax on any future increases in income.

Essex22011

getmore4less wrote: »

Is the other property mortgage free and worth £130k?

Hiya no it is worth around £250k

Has she done the CGT calculations if she does not live in it?
She has inherited the property and paid IHT on current market value last year.

You could get your property to a better LTV and get a better rate although 1.99% is OK


If going into the letting business with one property(the gifted one) then you could leverage the work/effort on doing that with a second property.

Have you done the business plan for the letting business with the tax changes you could be pushing 40% tax on any future increases in income.

I haven't, I think the net profit on the property would be around 450 a month so should tuck me just under. I won't receive any future increases as that salary is extremely high for my role

getmore4less

She is also gifting another property which has around £130k equity in it.

Q.Is the other property mortgage free and worth £130k?

A. Hiya no it is worth around £250k

If it is not mortgage free she cannot gift it too you.

how is the mortgage getting paid off?

What's it renting out at now?

I think the net profit on the property would be around 450 a month

how have you worked that out.

Essex22011

getmore4less wrote: »

If it is not mortgage free she cannot gift it too you.

how is the mortgage getting paid off?

What's it renting out at now?



how have you worked that out.

I will be getting a BTL mortgage on the property.
It's currently 5 rooms at £60 PW

getmore4less

That's £1,300pm £15,600py

Unless there are some horrendous expenses that will push into 40%
You don't take the mortgage interest off anymore.

Time for a business plan with proper tax calculations.

getmore4less

You have read everything on this page
https://forums.moneysavingexpert.com/discussion/5180214

Essex22011

getmore4less wrote: »

You have read everything on this page
https://forums.moneysavingexpert.com/discussion/5180214

Thanks all seems very confusing. I think that answers my query and I should just concentrate on paying my own property off

The_frugal_fairy

Hello

I would take some financial advice from an accountant regarding the taxation. There are limits on gifting money and assets. Inheritance tax and capital gain implications.

Also I would be wary of buy to let as the tax rules regarding this are also changing.

The_frugal_fairy

https://www.moneyadviceservice.org.uk/en/articles/gifts-and-exemptions-from-inheritance-tax

getmore4less

Tax on gift is often exaggerated especially the IHT ones.

There are no limits on gifting in the UK, all gifts are tax free.


The donor may not see the IHT tax benefits on their estate for 7 years when the all the gifts drop out, but they would have been taxed anyway so nothing extra to pay.

Gifts count as disposals for CGT they are for the donor to worry about.

It is quite rare the receiver to ever has to worry about IHT unless the gifts exceed the nil rate band, £280k fall inside a single nil rate band so if an isolated gift that would cover them anyway but if there is other gifting going on the full sequence need reviewing to see if any gifts become taxable in their own right.