Renting out house and renting another: tax?

dutchcloggie

Claire2989 said:

dutchcloggie said:

Claire2989 said:

Why don’t you just sell your house and buy another one in your new area when you’re ready? 

You can’t just make your tenants leave when you want to. Much better idea to sell up and buy as a chain free buyer instead of starting a business (it will be a business no matter how you personally view it!) you don’t really have the interest in starting.

Well, I have never lived in the area before. Only visited. I'm single, moving away from everyone I know and I have no idea about good or bad parts of the place I am moving to. Yes, I'm doing research, don't worry, but it seems more sensible not to buy right away and take my time in finding a nice area and then buy a house? Rather than buy a house and then find out I don't like the area? 

I would prefer to just sell my house and leavebleave everything behind, but everyone keeps telling me I shouldn't step off the property ladder at 44 and keep a foothold in case I don't like where I move to.

That’s why I was suggesting to buy when you’re ready (you suggested in a years time in your OP). I wasn’t suggesting blindly buying a house when you’re not sure.

Everybody might be suggesting it but they don’t need to take the responsibility and risk you will need to do. Letting is a long term investment. 

For example, in a years time what would happen if your tenant refuses to move (completely legal for them to do so) and you have to go down a costly court process to evict them (if you even can because you’ve done everything perfectly up to that point). You’re making a loss on your rental income minus expenses and tax. Then you get the property back and it’s trashed and you need to fork out a fair whack to get it back. In addition the predicted property slump has happened and your property isn’t worth what it was. All this to deal with while doing your regular job, living in rented when you just want to sell up and buy and not living in the area. I’m being worst case scenario but it’s a real risk. Is that what you want to deal with? 

Or would you prefer to sell rent for a bit then buy a suitable property when you know where you want to be. 

I’m usually supportive to wanna-be landlords looking to start a business but from what you’ve said that’s not you. You need to think of all the real risks and benefits and if that makes sense for your situation. Only you can make that decision.

True. But what about stepping off the property ladder with people saying that's a bad idea? I'm only on a nursing income so not exactly rich. So I'd worry about getting a mortgage again when I'm 45? On top of having to pay a penalty for leaving the mortgage early :-( 
Ugh, life was much easier when I still had a partner to discuss these things with. 

But yes, I'd prefer to sell and be done with it if it wasn't presented as a stupid thing to do.

macman

Being a LL is running a business, whether you think it's accidental or not. 

Slithery

dutchcloggie said:

But what about stepping off the property ladder with people saying that's a bad idea?

It's only a bad idea when house prices are rapidly rising, I can't see the market increasing much in the next year.

dutchcloggie

Slithery said:

dutchcloggie said:

But what about stepping off the property ladder with people saying that's a bad idea?

It's only a bad idea when house prices are rapidly rising, I can't see the market increasing much in the next year.

That's what I thought too. If nothing else, I am expecting a drop in the market so I keep thinking it would actually be a good time to sell, rent for a bit and then buy something later. 

Claire2989

It is tough to make these decisions sometimes. However even at 45 you’d be able to qualify for a 20+ year mortgage. If you buy in the new area you’d be looking at applying for a new mortgage anyway. And instead of spending any extra income on maintaining a property you’re renting you could use any extra cash to save an bolster your deposit. 

To be honest if the property slump does come you’ll probs get more for your money by selling now and waiting. Most rentals make a significant loss in the first 12 months and then you can offset that against subsequent years income. This is most likely not going to be the case for you if you’re looking more short term. Although mortgage exit fees aren’t ideal at least you know how much they’re going to cost. This business venture may cost you thousands and scupper any savings you currently have. 

greatcrested

Please read the link slithery gave you at the start if you are still considering letting. It will give you a good idea of what is involved. Here it is again!

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

mlz1413

To rent out you will need the permission of the lender as you will currently have a residential mortgage not a B2L. 
If you have exit fees could it be worth porting your mortgage? Yes it means selling and buying another house now, but depending on your exit penalty maybe worth considering.
You could ask an accountant how much they would charge to work out your actual costs of your original idea, this would be tax advice only, as others have said being a LL comes with risks so do read up.  

dutchcloggie

I am reading all the links. Working my way through them slowly. 
My feeling is that it is too much hassle to rent out.
I would use a fully managed agency though. Doing it all myself is not an option. So really my only hassle would be maintenance if needed and paying the tax.

I'm risk averse and it feels like selling is actually less risky and less complicated than renting.

csgohan4

dutchcloggie said:

Slithery said:

dutchcloggie said:

Will the tax man still see the rent from the house I own as pure income?

Yes, minus any allowable expenses. The rent you pay isn't one of them.

dutchcloggie said:

Surely not?

Why not? You'd be starting a residential lettings business.

Please read the following thread and all of the links that it contains before taking this idea any further...
Tenancies in Eng/Wales: Guides for landlords and tenants

Hmmmm....

It just seems weird. Most people like myself are clearly not starting a business but just covering costs. In fact, I will lose money on this (which I am ok with as it keeps me on the property ladder) even without having to pay tax.  It seems wrong to punish people like me who are clearly not trying to make money from this kind of thing.  

a business where it is losing money, is that viable??
you need to do a business case with potential yields, over heads, eviction costs, no rent coming through e.t.c

If I had the money now I wouldn't go into BTL, unless I was a millionaire and it was my full time job, otherwise S+S ISA e.t.c

Norman_Castle

dutchcloggie said:

Slithery said:

dutchcloggie said:

But what about stepping off the property ladder with people saying that's a bad idea?

It's only a bad idea when house prices are rapidly rising, I can't see the market increasing much in the next year.

 I keep thinking it would actually be a good time to sell, rent for a bit and then buy something later. 

How much equity in your current property? With a large deposit another mortgage should be easily available. Being chain free as both a seller and buyer is simpler.

Instead of renting would being a lodger or a house share be cheaper?