PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
We're aware that dates on the Forum are not currently showing correctly. Please bear with us while we get this fixed, and see Site feedback for updates.

Should/can we rent by still keeping our resi and BTL.

13»

Comments

  • Bookworm105
    Bookworm105 Posts: 1,740 Forumite
    1,000 Posts Name Dropper
    edited 2 August 2024 pm31 3:34PM
    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. 
    yes, as has already been explained 

    - 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.
  • Newheight13
    Newheight13 Posts: 215 Forumite
    Third Anniversary 100 Posts Name Dropper
    edited 2 August 2024 pm31 3:34PM
    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. 

  • Hoenir
    Hoenir Posts: 5,707 Forumite
    1,000 Posts First Anniversary Name Dropper
    edited 2 August 2024 pm31 3:34PM
    You might be unfortunate enough to encounter the tenant from hell. Then short term CGT concerns would pale into insignicance. 
  • silvercar
    silvercar Posts: 48,678 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    edited 2 August 2024 pm31 3:34PM
    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. 
    It’s a risk, but then future values are unknown, you may gain more in house value than you lose in tax.

    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 etc
    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.
  • saajan_12
    saajan_12 Posts: 4,478 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    edited 2 August 2024 pm31 3:34PM
    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. 

  • 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
    If everyone did this, there would be nowhere to rent.

    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.
  • 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
    If everyone did this, there would be nowhere to rent.

    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.
    I think it's more that the single property, amateur, possibly accidental, saw it on the TV so it must be easy, type of landlord should be put off.

    Decent, professional landlords that understand the system, abide by the regulations etc should continue to exist because there should be a rental market.
  • 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
    If everyone did this, there would be nowhere to rent.

    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.
    I think it's more that the single property, amateur, possibly accidental, saw it on the TV so it must be easy, type of landlord should be put off.

    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.
  • silvercar
    silvercar Posts: 48,678 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    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.
  • 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
    If everyone did this, there would be nowhere to rent.

    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.
    I think it's more that the single property, amateur, possibly accidental, saw it on the TV so it must be easy, type of landlord should be put off.

    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.
    I think the conditions, risks, regulations etc have changed sufficiently in the last 40 years that I would still ward people in that situation away from BTL.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.3K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.4K Spending & Discounts
  • 240.9K Work, Benefits & Business
  • 617.2K Mortgages, Homes & Bills
  • 175.7K Life & Family
  • 254.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.