Should my mum sell her property?

tideishigh

Thanks for reading.
My mum is retired, mortgage free and owns two investment properties which provide her a pretty good income (makes up for the small pension). She spends all of her money each month (on things she doesn’t ‘need’) and every now and again panics that she doesn’t have enough money for the bigger expenses such a newer car, a holiday, repairing the leaking flat roof. It’s at these times when she says that she will sell one of her investment properties to pay for these things and that it will be nice to have money in the bank.
My sister and I think this is a terrible idea but she feels that we are only interested in protecting our inheritance. This really isn’t the case. We feel that she needs to budget more and if so could afford the bigger expenses without reducing her income. Our worry is that she will fritter the money away and end up worse off. Obviously, at the end of the day, it’s her money to spend, but it just doesn’t make sense to us.
What should we do? Take her to see a financial advisor? Let her know how we feel but not interfere? Has she got a point? 

El_Torro

Tricky one this. You can certainly suggest an IFA, but the IFA will most likely suggest selling both BTLs and investing the money, whether it’s the right thing to do or not.

Depending on her age and circumstances perhaps selling the properties and buying an inflation linked annuity could be good? This would secure her monthly income, which is good, but might put her in a worse position (financially speaking) than she is now.

Ultimately, as you say, it’s her money to do with as she pleases. The more you suggest the less she might pay attention to you and purposefully do the opposite.

Bobziz

I guess the question I would be asking her is what is her plan ? how will she ensure that she doesn't run out of money or that her income drops to a point that she's unable to afford the lifestyle that she would like ? Selling a property may see her through, but has she done the calculations ? 

43722

Sell one property. 

MX5huggy

She could end up with a big Capital Gains Tax bill. https://www.gov.uk/capital-gains-tax/rates

Steve182

A friend of mine has 2 BTL's which are his pension.

He was interested in selling one and investing the proceeds in the stock market but I worked out his CGT liability if he did this was around £60K for just one property, so I suggested he should probably just keep hold of them forever.

They should rename BTL. It should really be called BTLKFL (buy to let, keep for life)

Keep_pedalling

Your mother is asset rich but cash poor, so moving away from having all her wealth tied up in property is not such a terrible idea. She has 3 properties and each of them carry the risk that any day she could be hit with a large repair bill she can’t afford to pay.

CGT is an issue but, if feasible, she could avoid it by selling her main home and either downsizing or moving into one of her other properties.

csgohan4

consider a financial assessment of income/expenditure using a spreadsheet. Strip out the unnecessary items. That way no need to sell any property with taxes and issues that come with it

I would love to dine at expensive restaurants and order a Tesla, if I did, I would be living on beans for a long time. Spend what you need and splurge when you can. 

C_Mababejive

She needs to keep all the properties. Their capital value will slowly increase as will the rents from them. Her pensions will also increase.

She needs to manage her finances better and/or leverage debt at the cheapest rates possible for lager capital spends on needs not frivolities. The world is gorging itself on debt. Join the party.

unkle

Your mum has two properties, she has I assume a lot of capital tied up in them.

To answer properly we'd need to know the values, the income they provide, her income tax position and what CGT would be payable if she were to sell one or both as well as her age etc.

It's very easy to say don't sell. But if they were say worth £1m between them and provided an income of say £2,500 a month gross she may wish to sell and enjoy further what she has built up rather than as she may see it, scrimp and save simply to leave her capital in tact. You can't take it with you as they say..........

It's her money that she has built up over time, think it's harsh to say she should;t be spending on things she doesn't need, if it gives her pleasure why not.

Again depending on values IHT planning may be required as well.

barnstar2077

It really depends on her behaviour.  If she is someone who spends money like water flowing through her fingers (like my mum did) then she would be a lot worse off in a few years once she has blown it all.  On the other hand though, you can't take it with you, and depending on her age, why not!  I would stick with the higher monthly income personally and learn to budget a bit.  Budgeting doesn't mean not spending a lot of money, it just means being able to spend money you know you have, stress free!