Should I sell my 2nd home or keep it????

teabelly

Only you can answer that question! If you came to sell in the future then there are ways around the CGT as you could either move into the flat and call it home for a while or there are legal ways around it using discretionary trusts if you have a tenant living in it as you can use their PPR relief. There is also letting relief.

Also add in what taxes you'd have to pay on your investment profits too. That 40k advantage could be wiped out by CGT on share sales or just plain tax on interest earned.

I think you need to talk to a proper financial advisor that understands the property market and investment market and possible tax implications of either choice as for me I'd choose property over most investments just on the gearing side of things but if you aren't doing that then the choice is harder.

Usual property indicators show prices tend to double every 10 years or so so I think your flat might be more like £350-400k in 21 years time. How long have you owned it?

T._x

It's a good situation to be in. My mother would be in a similar position to yourself matthewse, and she plans to keep hold of hers until it would reach 200K (currently worth around 165K). Good post by teabelly.

Whereabouts in Scotland is the flat? Slighly off topic but £550pm seems reasonable.

silvercar

Tax wise, you would be exempt from CGT for the time it was your home and the last 3 years of ownership. You would consider the rest of the time as a proportion of the total and have a CGT liability on that proportion of the gain. Add to that your CGT allowance and letting relief (max 40k); chances are you wouldn't have any CGT to pay for a few years and even then it would be small amount.

SouthCoast

Until you have actually sold the flat you have not made a profit.

Pez2

Sounds to me like you don't really want the hassle of being a landlord and would rather sell it before CGT kicks in, but you're worried that by selling now you might lose out later on down the line. It seems to me that no-one really knows for sure what the future will hold - maybe you'll make more money if you hold, maybe you'll make more money if you sell - but if your instinct is to sell and have the money nice and safe in the bank then go for it. Oh, and forget all the people saying "you'd be mad to sell". Anyone can be an 'expert' when it comes to other people's money, but ultimately it's you that has to live with the consequences, so go with your gut and don't look back.

matthewse

teabelly wrote: »

Only you can answer that question! If you came to sell in the future then there are ways around the CGT as you could either move into the flat and call it home for a while or there are legal ways around it using discretionary trusts if you have a tenant living in it as you can use their PPR relief. There is also letting relief.

Also add in what taxes you'd have to pay on your investment profits too. That 40k advantage could be wiped out by CGT on share sales or just plain tax on interest earned.

I think you need to talk to a proper financial advisor that understands the property market and investment market and possible tax implications of either choice as for me I'd choose property over most investments just on the gearing side of things but if you aren't doing that then the choice is harder.

Usual property indicators show prices tend to double every 10 years or so so I think your flat might be more like £350-400k in 21 years time. How long have you owned it?

I have owned the flat for 8 years. I think you are right I do need to talk to a proper financial adviser but I really don't know who to talk to. I have spoken to two and they say they can't tell me what is financially best for me only how to invest any profit I earn!!!! Should I go to an accountant instead???

matthewse

T._x wrote: »

It's a good situation to be in. My mother would be in a similar position to yourself matthewse, and she plans to keep hold of hers until it would reach 200K (currently worth around 165K). Good post by teabelly.

Whereabouts in Scotland is the flat? Slighly off topic but £550pm seems reasonable.

My flat is in Edinburgh. I can get higher than £550 as it is a 3 bedroom flat and the flat upstairs from me rents out for £650 but as I have a fantastic tenant I want to keep him there so have not raised the rent (I am also on a fixed interest rate so I don't need to raise the rent for 3 years).

matthewse

GavP wrote: »

Sounds to me like you don't really want the hassle of being a landlord and would rather sell it before CGT kicks in, but you're worried that by selling now you might lose out later on down the line. It seems to me that no-one really knows for sure what the future will hold - maybe you'll make more money if you hold, maybe you'll make more money if you sell - but if your instinct is to sell and have the money nice and safe in the bank then go for it. Oh, and forget all the people saying "you'd be mad to sell". Anyone can be an 'expert' when it comes to other people's money, but ultimately it's you that has to live with the consequences, so go with your gut and don't look back.

I think you have summed it up GavP. I think this is my situation and it is because of what people are saying that I am torn. I also don't want to look back in 21 years and kick myself for a bad decision - which I know I will do!!!!

teabelly

An accountant is certainly worth talking to. I suspect they don't want to say in case they are wrong as there are a lot of unknowns and ifs etc.

It might be worth asking the question on the singingpig forum. It is a forum for investors and business minded people and they may be able to point you to professionals. There are experienced investors, newbies and all sorts of business people on there.

It can only be your call and you may make a choice that you later regret but that is life unfortunately. Sometimes with difficult decisions I toss a coin then follow what my gut instinct tells me from that.

TTMCMschine

matthewse wrote: »

My flat is in Edinburgh. I can get higher than £550 as it is a 3 bedroom flat and the flat upstairs from me rents out for £650 but as I have a fantastic tenant I want to keep him there so have not raised the rent (I am also on a fixed interest rate so I don't need to raise the rent for 3 years).

How about over paying on your mortgage, if you can afford to, and are allowed to. Could you do it in ten years? That way you'd save a ton on interest. By the time you've paid off your mortgage any downturn should have corrected itself (you haven't been hit YET). Try using a mortgage calculator, because the interest you might save may be tempting. Any ctg, etc will more than have wiped itself out by the interest you will have saved youself. Then any rent you receive after that you can either save (minus costs), use as an income supplement etc - meanwhile your flat should be appreciating in value. I have to say - i'm not very good at stuff like this - so it might be a rubbish idea, but it's another option.