Rental property sell or keep?

Somerset2015

I had 2 BTL properties, one of which I sold in 2022 leaving the remaining rental mortgage free. I’ve have a lovely family renting from me for the last 3 years.  They expressed a wish to buy it should I decide to sell in the future. With Capital Gains Tax being abolished in April 2024 this got me thinking ! 

Is it time to enjoy the benefits of my hard work and sell up? 

Where would be the most tax efficient place to invest. 

I just don’t know what to do?   
I am in my early 60’s and would like to stop working asap but won’t get my government pension until I’m 67. 

I have asked my IFA but all he does is point me to funds that make him lots of money but limited me to what I can withdraw. Baring in mind I need a monthly income. 

As a newbie on here I hope someone has some words of wisdom. Tia 

Linton

Somerset2015 said:

I had 2 BTL properties, one of which I sold in 2022 leaving the remaining rental mortgage free. I’ve have a lovely family renting from me for the last 3 years.  They expressed a wish to buy it should I decide to sell in the future. With Capital Gains Tax being abolished in April 2024 this got me thinking ! 

Is it time to enjoy the benefits of my hard work and sell up? 

Where would be the most tax efficient place to invest. 

I just don’t know what to do?   
I am in my early 60’s and would like to stop working asap but won’t get my government pension until I’m 67. 

I have asked my IFA but all he does is point me to funds that make him lots of money but limited me to what I can withdraw. Baring in mind I need a monthly income. 

As a newbie on here I hope someone has some words of wisdom. Tia 

Are you sure you are really talking to an IFA rather than an FA/salesman?  A true IFA gets no benefit from choosing one fund rather than another, you simply pay for their advice.  Any form of commission is banned.

If the money from the sale of the houses is substantial, say >£100K, I suggest you talk to a qualified, regulated IFA.  The IFA's duty is to advise you how to arrange your affairs to best meet your needs.  That would include ways to minimise tax and to ensure your income as well as choice ofg funds.

MX5huggy

First Capital Gains tax is not being abolished. The CGT allowance is being further cut from the current £6000 (it was £12 and a bit) to £3000 in April 2024. I don’t really see this as a significant factor in this decision. 

I would open the conversation with your tenants they maybe looking to move because they want to buy. Selling while you have known good tenants is a bit of a rough thing to do IMHO the risk in BTL is biggest when changing tenants. 

Pipthecat

It's a complicated one that depends on what the house is worth, what its rental it brings, or could bring, in and your position in regards to any other savings and pensions you have.   You have to balance stopping work ASAP against what you want to retire on

Albermarle

 With Capital Gains Tax being abolished in April 2024 

Where did you get this info from ??

dunstonh

I have asked my IFA but all he does is point me to funds that make him lots of money but limited me to what I can withdraw. Baring in mind I need a monthly income. 

As mentioned above, IFAs do not get paid by the fund house or provider.  You pay the IFA.     Only FAs get paid for pushing their linked funds/provider (although you pay for it in higher product charges).

Plus, IFAs do not retail investments that have a tie in.   Again, there are only FAs that do this (notably SJP)

With Capital Gains Tax being abolished in April 2024 this got me thinking ! 

That would be nice but its not.    Indeed, its getting worse.  CGT allowance is dropping to just £3,000 from current £6,000 which was £12,300 last year.

SouthCoastBoy

Albermarle said:

 With Capital Gains Tax being abolished in April 2024 

Where did you get this info from ??

I assume it is with reference to the thresholds being reduced, to my knowledge cgt is not being abolished

Sarahspangles

I’m sure there are all kinds of reasons they aren’t a good idea, otherwise a private mortgage might suit you and your lovely tenants - they want to buy, you want to sell, you don’t need the money all at once!

pinnks

Sarahspangles said:

I’m sure there are all kinds of reasons they aren’t a good idea, otherwise a private mortgage might suit you and your lovely tenants - they want to buy, you want to sell, you don’t need the money all at once!

Not sure I would enter into a 25-year loan agreement with "complete strangers" (I know they have been good tenants).  The legal costs would be quite significant to get an enforceable agreement and first charge on the property but then how would you deal with interest rate fluctuations? Annual fixed or something more complicated?  And what about enforcement if it all went belly-up?  And what about when you peg it and the whole thing falls to your Executors to unwind? Certainly wouldn't be for me but everyone needs to make the own decisions...

Sarahspangles

pinnks said:

Sarahspangles said:

I’m sure there are all kinds of reasons they aren’t a good idea, otherwise a private mortgage might suit you and your lovely tenants - they want to buy, you want to sell, you don’t need the money all at once!

Not sure I would enter into a 25-year loan agreement with "complete strangers" (I know they have been good tenants).  The legal costs would be quite significant to get an enforceable agreement and first charge on the property but then how would you deal with interest rate fluctuations? Annual fixed or something more complicated?  And what about enforcement if it all went belly-up?  And what about when you peg it and the whole thing falls to your Executors to unwind? Certainly wouldn't be for me but everyone needs to make the own decisions...

Those are the all kinds of reasons! They used to happen within families I think.

pinnks

They did indeed, and we looked into it recently within the family.  Came to naught for other reasons but it isn't for the faint-hearted, even within the family...