CGT or Borrow

martindias

I am completing a house renovation and, as they always do, the costs have gone well over budget, partly because I have opted to include a Heat Source Pump and Solar Panels in the project.

I have a reasonable small pension and a lot of Capital in investment funds plus £150k ISA. So I can certainly afford the renovation but it does mean selling off some investments or using my ISA. As they are all currently (yes I know only currently) earning an average 10% return i will either have to pay the higher rate of CGT or use up my ISA.

My bro recently suggested taking out a house development load to cover the SOLAR Panels and ASHP so i don't breach my CGT 10% allowances in the current tax year. I could then spread the loan over the lifetime of the The Renewable Heat Incentive (RHI) - 7 years.

With interest rates so low at present the cost of the loan will not be onerous and enable me to stay invested.

Yes I know a good place to be in - just trying to manage my life savings sensibly to see me into my 90s. ANy advice gratefully received. I hear a financial advisors of some years ago telling me 'never borrow whilst you're in credit'.

DCFC79

The rate your offered on a loan will determine if you go take that option.

pjcox2005

Can't really give a full response but have you taken into account your (and potential partners) personal allowance for CGT which would exempt some of the gain?


Likewise, would a 0% credit card work to fund some of the works if only for a year or so. Could be easier to get approval and lowers any borrowing rates?

martindias

yep looked at CC 0% interest deals but the £20k i need would well exceed my CC limit which stands at £7k ( currently have the Clarity card and this month just £400 incurred and nothing brought forward) Only guessing but if i open a new card offering 0% interest transfers, but with a transfer fee, i won't be able to significantly increase by borrowing limit - would i?

martindias

I've already breached my CGT allowance for this year and now into the 10% band. Before the end of this build, and in this financial year, I may have to go into the CGT 20% band, This is really what i am trying to avoid by spreading the build costs over the next two or three tax years.