Should my mum sell her property?

in Savings & Investments
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tideishightideishigh Forumite
2 Posts
First Post
MoneySaving Newbie
Thanks for reading.
My mum is retired, mortgage free and owns two investment properties which provide her a pretty good income (makes up for the small pension). She spends all of her money each month (on things she doesn’t ‘need’) and every now and again panics that she doesn’t have enough money for the bigger expenses such a newer car, a holiday, repairing the leaking flat roof. It’s at these times when she says that she will sell one of her investment properties to pay for these things and that it will be nice to have money in the bank.
My sister and I think this is a terrible idea but she feels that we are only interested in protecting our inheritance. This really isn’t the case. We feel that she needs to budget more and if so could afford the bigger expenses without reducing her income. Our worry is that she will fritter the money away and end up worse off. Obviously, at the end of the day, it’s her money to spend, but it just doesn’t make sense to us.
What should we do? Take her to see a financial advisor? Let her know how we feel but not interfere? Has she got a point? 
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Replies

  • El_TorroEl_Torro Forumite
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    Tricky one this. You can certainly suggest an IFA, but the IFA will most likely suggest selling both BTLs and investing the money, whether it’s the right thing to do or not.

    Depending on her age and circumstances perhaps selling the properties and buying an inflation linked annuity could be good? This would secure her monthly income, which is good, but might put her in a worse position (financially speaking) than she is now.

    Ultimately, as you say, it’s her money to do with as she pleases. The more you suggest the less she might pay attention to you and purposefully do the opposite.
  • BobzizBobziz Forumite
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    I guess the question I would be asking her is what is her plan ? how will she ensure that she doesn't run out of money or that her income drops to a point that she's unable to afford the lifestyle that she would like ? Selling a property may see her through, but has she done the calculations ? 
  • 4372243722 Forumite
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    Sell one property. 
  • MX5huggyMX5huggy Forumite
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    She could end up with a big Capital Gains Tax bill. https://www.gov.uk/capital-gains-tax/rates
  • edited 9 June at 11:27PM
    Steve182Steve182 Forumite
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    edited 9 June at 11:27PM
    A friend of mine has 2 BTL's which are his pension.

    He was interested in selling one and investing the proceeds in the stock market but I worked out his CGT liability if he did this was around £60K for just one property, so I suggested he should probably just keep hold of them forever.

    They should rename BTL. It should really be called BTLKFL (buy to let, keep for life)
    “Like a bunch of cod fishermen after all the cod’s been overfished, they don’t catch a lot of cod, but they keep on fishing in the same waters. That’s what’s happened to all these value investors. Maybe they should move to where the fish are.”   Charlie Munger, vice chairman, Berkshire Hathaway
  • Keep_pedallingKeep_pedalling Forumite
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    Your mother is asset rich but cash poor, so moving away from having all her wealth tied up in property is not such a terrible idea. She has 3 properties and each of them carry the risk that any day she could be hit with a large repair bill she can’t afford to pay.

    CGT is an issue but, if feasible, she could avoid it by selling her main home and either downsizing or moving into one of her other properties.
  • FeralHogFeralHog Forumite
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    Steve182 said:
    A friend of mine has 2 BTL's which are his pension.

    He was interested in selling one and investing the proceeds in the stock market but I worked out his CGT liability if he did this was around £60K for just one property, so I suggested he should probably just keep hold of them forever.
    Did you also work out how much income tax he would save over the years by drawing an income from shares instead of property?
    And how substantial future capital gains could be realized without any further CGT liability, with some shares sheltered in ISAs and others realized gradually within the annual allowance? While the CGT liability for property would only get worse.
  • FeralHogFeralHog Forumite
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    The issue is that, if she's barely keeping expenditure within her income now, her income will only drop after selling a property, so is she going to gradually spend the proceeds, and then sell the other BTL property, and then spend the cash from that, and then have only her small pension to live on?
    If she wants to spend big on specific things in the near term, but would happily manage on a lower income after that, then fine, it's her money.
    But is there a plan? Or is she going to drift into gradually spending her capital and then having a low income?
    How serious a risk that is does depend on how fast she is likely to get through the proceeds on selling a property, and on her age. When you're old enough, if you fancy spending a chunk of your capital, it may do you no harm at all. It's doing it too early that can give you problems later on.
  • edited 10 June at 9:22AM
    csgohan4csgohan4 Forumite
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    edited 10 June at 9:22AM
    consider a financial assessment of income/expenditure using a spreadsheet. Strip out the unnecessary items. That way no need to sell any property with taxes and issues that come with it

    I would love to dine at expensive restaurants and order a Tesla, if I did, I would be living on beans for a long time. Spend what you need and splurge when you can. 
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ PIxie/ Bowlhead99 RIP
  • C_MababejiveC_Mababejive Forumite
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    She needs to keep all the properties. Their capital value will slowly increase as will the rents from them. Her pensions will also increase.

    She needs to manage her finances better and/or leverage debt at the cheapest rates possible for lager capital spends on needs not frivolities. The world is gorging itself on debt. Join the party.
    Feudal Britain needs land reform. 70% of the land is "owned" by 1 % of the population and at least 50% is unregistered (inherited by landed gentry). Thats why your slave box costs so much..
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