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Should/can we rent by still keeping our resi and BTL.
Comments
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Newheight13 said:Ok so I guess the key question is, could I let out my residential for 9 months without having to worry about CGT if I choose to sell at that point?
Thanks guys.
- for the time the property was your main home you get Private Residence Relief, meaning the gain it made is negated by PRR
- because it was once your main home you also get the final 9 months of ownership as "deemed" PRR . This is to allow people time to sell a property even if they cease to live in it without slipping into having to pay CGT. It does not matter what you do with the property in those 9 months: leave it empty or let it, you still get PRR. The terminology used is "in any event"
CG64985 - Private residence relief: final period exemption - HMRC internal manual - GOV.UK (www.gov.uk)
and anyway, even if you hold on to it for more than 9 months the amount of CGT you'd have to pay would be in the low hundred £ given such a modest gain of only £70k, although you will need to sell before the Autumn budget when the tax rate will be increased substantially
please be specific as to what you saw on accountancy pages that conflicts with those facts so we can explain how you misunderstood it.
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It was something about having 10 years PRR regardless, I think it might have been specific to a scenario now rather that general advice. If I can find it again I’ll post it here.
I’ve only owned the property 3 years, so my concern would be that if I rented it for more than the 9 months after, then it would work out that I’d have to pay quite a bit of CGT and lose a large proportion of the PRR.
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You might be unfortunate enough to encounter the tenant from hell. Then short term CGT concerns would pale into insignicance.2
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Newheight13 said:It was something about having 10 years PRR regardless, I think it might have been specific to a scenario now rather that general advice. If I can find it again I’ll post it here.I’ve only owned the property 3 years, so my concern would be that if I rented it for more than the 9 months after, then it would work out that I’d have to pay quite a bit of CGT and lose a large proportion of the PRR.
At the moment, if you’ve owner occupied for 3 years, rent it out for one year. Then 3.75/ 4 of the gain would be exempt.Add another years rental and you 3.75/ 5 being exempt. Another year and you’re down to 3.75/ 6.
but if property value increased by 5% a year you are taking the percentages of a different number.
The tax payable depends on your marginal tax rate, 18 or 28%, whether you are splitting this with a partner, what the CGT allowance would, what the government will do to CGT rates etcI'm a Forum Ambassador on the housing, mortgages, student & coronavirus Boards, money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.1 -
Please stick to one thread. If there's something you want to question, then present the opposing advice on the same thread so people can explain the difference or correct themselves.
Regardless, starting a new thread wastes peoples time in providing advice again without the prior discussion and is unappreciative to the advice already received.
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Mark_d said:Personally I'm not a fan of BTL. With all the risks and costs associated with letting a property, as well as the tax on rental income, I don't see a real financial benefit
It's hard enough as it is to find a rental property. Not everyone is in the right place to buy or even wants to. Renting suited me for a number of years.
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newsgroupmonkey_ said:Mark_d said:Personally I'm not a fan of BTL. With all the risks and costs associated with letting a property, as well as the tax on rental income, I don't see a real financial benefit
It's hard enough as it is to find a rental property. Not everyone is in the right place to buy or even wants to. Renting suited me for a number of years.
Decent, professional landlords that understand the system, abide by the regulations etc should continue to exist because there should be a rental market.0 -
BarelySentientAI said:newsgroupmonkey_ said:Mark_d said:Personally I'm not a fan of BTL. With all the risks and costs associated with letting a property, as well as the tax on rental income, I don't see a real financial benefit
It's hard enough as it is to find a rental property. Not everyone is in the right place to buy or even wants to. Renting suited me for a number of years.
Decent, professional landlords that understand the system, abide by the regulations etc should continue to exist because there should be a rental market.Thing is though, when they start out, no landlord really knows those things. You often learn them the hard way.It's not like starting a job where you have a mentor to stop you making mistakes.
My folks bought their first BTLs because there was a shortage of student accommodation and as they both worked at the local city University, they felt they could support the expansion which was hampered by a lack of anywhere to live.
Other than the basics - i.e. you become responsible for maintenance and so on - they had no idea how this all worked.
40 years later, they're experienced landlords and have given advice to other family members who have got into this.
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I’ve merged the two threads that OP posted on this topic.I'm a Forum Ambassador on the housing, mortgages, student & coronavirus Boards, money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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newsgroupmonkey_ said:BarelySentientAI said:newsgroupmonkey_ said:Mark_d said:Personally I'm not a fan of BTL. With all the risks and costs associated with letting a property, as well as the tax on rental income, I don't see a real financial benefit
It's hard enough as it is to find a rental property. Not everyone is in the right place to buy or even wants to. Renting suited me for a number of years.
Decent, professional landlords that understand the system, abide by the regulations etc should continue to exist because there should be a rental market.Thing is though, when they start out, no landlord really knows those things. You often learn them the hard way.It's not like starting a job where you have a mentor to stop you making mistakes.
My folks bought their first BTLs because there was a shortage of student accommodation and as they both worked at the local city University, they felt they could support the expansion which was hampered by a lack of anywhere to live.
Other than the basics - i.e. you become responsible for maintenance and so on - they had no idea how this all worked.
40 years later, they're experienced landlords and have given advice to other family members who have got into this.0
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