Should my mum sell her property?

Steve182

Deleted_User said:

Steve182 said:

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.

Did you also work out how much income tax he would save over the years by drawing an income from shares instead of property?

And how substantial future capital gains could be realized without any further CGT liability, with some shares sheltered in ISAs and others realized gradually within the annual allowance? While the CGT liability for property would only get worse.

In the long run I'm sure he would be better off selling, swallowing the CGT bill and investing in equities in tax wrappers. That's what I would do, but he's not me.

He's more risk averse, so my concern would be that after swallowing a £60K tax bill and investing it all in equities he might not take a significant stock market correction very well. It's much easier to accept such a thing if you're already in profit, and don't feel like you have just been fleeced by HMRC.

Nebulous2

There is a great deal we don't know: - 
1) Who manages the properties? As she's getting older that might become more difficult if she is doing it herself. 
2) How old is she? 
Others have asked other significant questions, such as how much the properties are worth.

tideishigh

Thanks all, really helpful to have a survey of opinions. 

My mum is 70, the rental properties are worth about 400-450k combined and bring in around 2k a month. They are managed by an agent. I think what doesn’t help is that my sister and I regularly see elderly people through our work that are living in crappy circumstances which could have been prevented with a bit of foresight and would hate for that to happen to our lovely mum.
Also, totally get the theme of can’t take it with you, it’s her money etc etc. My parents worked hard and went without in order to pay their mortgage off so it is her time to be spoiling herself, couldn’t agree more. 

Thanks again for taking time to respond, much appreciated.

kidmugsy

tideishigh said:  My mum is 70, the rental properties are worth about 400-450k combined and bring in around 2k a month. 

Did she qualify for her state retirement pension before 06/04/16?  If so an attractive investment might be to suspend (aka "defer") her state pension for (say) five years.  That way when she restarted it would be 50% bigger.  Buying what is effectively a government-guaranteed index-linked annuity at that price is remarkable value.  It is one investment she could make if she sold her house, and it would spread her risk by diversifying from stocks and shares, and property.