Should we sell or continue to let ??

suchard

Can anyone offer a 2nd/3rd opinion for us please ?

We bought a 2nd property 5 years ago when my hubbie and I split up for a time and amicably were able to purchase a flat for one of us to live in. We have since got back together and have been renting it out for the last 3 years - but are now thinking about selling it. Currently the amount of rent covers the mortgage cost with a small amount left to cover expense of wear and tear etc. We feel that if we sold it the rise in house prices would mean that the excess would actually enable us to pay off our mortgage on our family home. (It was obviously a good investment, if maybe under the wrong circumstances!!! ) If we did this we would then have the monthly mortgage payments for the family home free to invest elsewhere - but that's another story.

Does anyone have any views on whether selling and getting rid of both our mortgages may be the thing to opt for?
All opinions gratefully received - thanks

meanmachine_2

Well what's your rental yield?

If it's anything under 5% then sell and put the profit into a high interest account. Less hassle, more security.

Also, you have to bear in mind that the market - according to many - has now peaked and will either stagnate for years or crash and then recover.

Although all of that is only speculation.

However, if you decide to sell, remember that it's a buyer's market and you might only get 90% of the asking price.

And as this site is designed to help people saving money and get out of debt, imagine your lives without ANY debt, even a "good" debt like a mortgage... Ah heaven.

Although you also have to be sure that you guys will stay together this time around.

thaylock

Sell it & pay off your mortgage.

Greentea

Remember that you will be liable for Capital Gains Tax on a second property. However, you are exempt for the last 3 years, providing the property has been your main residence for some period.

Pheno

meanmachine wrote:

Well what's your rental yield?

If it's anything under 5% then sell and put the profit into a high interest account. Less hassle, more security.

Actually, since the original poster is currently paying a mortgage on their current house, wouldn't it be worth selling if the return is less than approximately 6% ?

bunking_off

*In these particular circumstances* I'd probably say sell.

Why? At the moment, you shouldn't have any capital gains tax payable.
I may be wrong on this - check with somebody qualified - but I don't think the taxman looks at the gain on a year by year basis, just the total gain then apportions it according to how many years are chargable versus exempt..

Let's say you keep it for another year, and prices stagnate. If you then sell, I believe the way the system works is that you'd pay capital gains tax on 1/4 of the total gain (minus reliefs), on the basis that you can disregard 3 years after you lived in the property, ie 3/4 of the gain. So, by not selling you end up paying capital gains tax, even though in the year in question you'll not have made any gain.

In the extreme, I guess prices could drop over the next year but by keeping hold of the property, you expose yourself to a tax liability because overall you'll have gained over the period of ownership.

Given everyone seems to think house price growth will be lower than it has been, I struggle to see how this can't adversely affect you as you'll be averaging past periods of high growth with future periods of lower growth when it comes to CGT.

zzzLazyDaisy

Sell, pay off the mortgage, and then take stock of your finances. The saving on the mortgage repayments will give you a better income /life style, and may allow you to pay nto a regular savings/investment plan for the future.

I paid off my mortgage a while ago. It was the best thing I ever did.

Pheno

suchard, like any investment the key is in the figures. What is your rent, how much do you think the house is worth and how big is your mortgage on it?

snake666

glad you guys are back together
sell it and payoff the any outstanding debts sit on the cash as announced today housing prices fell this month a crash is on it way then buy again when you think the bottom has fell out of the market
snake

suchard

Thanks to you all for taking the time to pass comment.
Gut instinct - and your advice - says sell, sell, sell.
Sounds good to me - being mortgage free will I'm sure have it's benefits. Guess I might be back here again shortly asking for savings advice !!!
:beer: Thanks, again, to you all.