To buy or save

ukrv

I am Just about to agree the sale of my property but do not have anywhere to go. Is there any advantage in saving or investment of about £300000 or is it best to buy something as quickly as possible. It would make a good interest return but would the real value diminish. Would I still have enough money in six months to buy somewhere of an equal value to todays market.

neilp

The big issue is whether house prices will fall. This seems likely, which means it is probably not a bad idea to wait a while before buying another property (probably more than six months, though).

1echidna

I would go with the neilp's answer. You want to tailor it to your individual needs though, that is the suitability of your temporary accomodation. It gives you a good chance to take your time in looking for a property you really like and suits all your needs, with a good chance of getting more for your money.

ukrv

Thanks for the responses.
Why more than six months neilp?
Do you have to pay tax on money that copmes from a hpuse sale or is that just capital gains ta, which I do not think we have to pay as we have lived here for 16 years.

ukrv

Oops! Sorry about the typos.

SpinnerB

saving is very different to investing, investing could really put you in good position given 300K to invest ... but you may loose it ... especially if you only want to play for 6 months ...

Aegis

SpinnerB wrote: »

saving is very different to investing, investing could really put you in good position given 300K to invest ... but you may loose it ... especially if you only want to play for 6 months ...

In fact, to further clarify...

If you "invest" over 6 months, you are essentially speculating rather than investing, which is much riskier than what most of us discuss here. Short term volatility in that time can truly ruin your portfolio, even if you are fairly experienced at short term trading. Investing most definitely requires a longer time-scale than 6 months.

neilp

I think house prices will take longer than six months to bottom out - I would guess this is more likely to happen in late 2009 or early 2010, though it is impossible to know. As far as I am aware capital gains tax is not payable on a property if it is your primary place of residence. This means that the only tax you will be liable for will be on the interest on your equity. However, you can put at least £3,600 per year into a cash ISA (I say at least because limits might go up in future years), and there is the option of tax free NS&I index linked savings certificates if you are not going to need the money for at least a year.

I would go along with others' comments about investing - it is probably not a good idea over a time frame of less than, say, five years.

Entertainer

You have to make a judgement about where you think house prices will go in the short term. Truth is, no one knows. That said, given the market seems to be flattening out you have picked as good a time as any to be "resting" from the market.

DeepSporran

ukrv wrote: »

Do you have to pay tax on money that copmes from a hpuse sale or is that just capital gains ta, which I do not think we have to pay as we have lived here for 16 years.

There is no income tax on the proceeds from the sale of your property.There will be no capital gains tax either, assuming this property was your principal private residence all the time you owned it.

Once you put the proceeds into a savings account, any interest you earn will be subject to income tax, just like any other savings.

ukrv

ok, so I have decided not to buy another house yet. For safety reasons do I put my £300000 into a number of high street bank savings accounts with not more than 35000 in each?