Using Crystallised Pension Funds in a First Time House Purchase - tax question

xylophone

If you have no other income,

The OP has other income.

I have not made profits enough to be taxed on.  I have 2 smallish company pensions from previous employments that I use for income.

Qyburn

xylophone said:

If you have no other income,

The OP has other income.

Which clearly makes it worse, but since he's not said how much we don't know how much worse. I would have thought the "assuming no other" might at least give him an indication of the scale of taxation.

I could have written ...
"To end up with £100k after tax you need to take at least £160k from your pension, but we can't say exactly how much more as it depends on your other income"

Is that better?

xylophone

Is that better?

You seem to have interpreted an observation as a criticism (which it wasn't).

Apologies!

QrizB

ABSP said:

Thank you to all.  In answer to a question posed.  We are aiming to buy a park home for £300K.  We are able to do this:  2/3 with the money we get from the sale of my mum's house after her death and 1/3 I hoped from my crystallised pension. 

Are park homes mortgageable? £300k seems quite a lot for one.

Assuming they are, a £100k, 10-year mortgage fixed at 4.8% for the first 5 years will cost around £1050 a month, £12600 a year.

If we assume you're a basic rate taxpayer, to get £12600 out of your crystallised pension will cost £15750. Over 10 years, then, you're looking at drawing £157500.

Alterntively, if you wanted to pay it all upfront, to get £100k after tax you're looking at taking maybe £180k from your pension (we'd need more details of your current income to give an accurate figure).

xylophone

Are park homes mortgageable? 

It would appear not.

https://goldshieldwarranty.co.uk/pros-and-cons-of-park-home-living.html

You won’t be able to get a mortgage on a park home 

Park homes are neither leasehold or freehold properties, and the land on which they stand belongs to the site owner, not the residents. This means that you can’t get a mortgage on a park home, because lenders won’t allow you to secure a loan on a property with no formal legal title at the land registry.

As such, park homes are a better option if you have enough equity to buy outright, or have savings set aside to help cover the cost. If you need more financial assistance to help fund the purchase, then take a look at our guide to financing a park home to learn more about other ways to buy.  

But £300,000 does seem rather high considering

Park homes are affordably priced, which makes them great options for retired people on a budget.

Dazed_and_C0nfused

Some might consider £300k the cheaper end of the market!

https://www.rightmove.co.uk/properties/131616872

xylophone

Some might consider £300k the cheaper end of the market!

Good grief! I simply can't see the attraction!

Mutton_Geoff

I recently bought a yacht with mostly cash but the balance funded from my crystallised SIPP. The amount drawn was partly taxed at an effective rate of 60% (£25,140 worth due to loss of personal allowance) and the rest at 45%.

Since I'm already a higher rate tax payer, any loan would have been paid from 40% taxed drawdown so I just worked out the additional cost of taking the money from my SIPP. It was cheaper than the loan offers I'd had at 8-11% APR.

I would do a lot of homework on park homes before even thinking of buying one!

Albermarle

Dazed_and_C0nfused said:

Some might consider £300k the cheaper end of the market!

https://www.rightmove.co.uk/properties/131616872

It is brand new and in a very desirable location. On the cliffs overlooking the Solent, with the New Forest a few minutes away . More likely will be a second home, as only just over an hours drive from London.
However £300K is not really the cheaper end of the market.
Scunthorpe, Lincolnshire, DN16 2 bed park home for sale - £45,000 (onthemarket.com)