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Being part gifted a property - advice needed

2

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  • SpiderLegs
    SpiderLegs Posts: 1,914
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    Might sound basic to you, well done.

    I only found out about this opportunity a day ago so no, this is my first port of call, apart from some quick research which didn’t help me much, hence coming here

    You have to remember that some posters expect you to have complete knowledge on the very subject you want advice on before you ask a question that you then already know the answer to.
  • csgohan4
    csgohan4 Posts: 10,587
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    Why is your dad giving up the house? BTL no longer is the cash cow it used to be

    Are you sure you want to run a BTL, do you have a thought out business plan, void periods, over heads e.t.c?

    https://forums.moneysavingexpert.com/showthread.php?t=5956212

    https://forums.moneysavingexpert.com/showthread.php?t=5896992

    https://forums.moneysavingexpert.com/showthread.php?t=5983050
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    Aside all that, it would appear OP would be essentially making a derisory return on it anyway.
    No doubt Dad had a good run for his money from HPI since he bought but those times seem to be over for the next few years.
    I guess OP is simply thinking "mortgage interest on £100k = £5k a year, rent = £9k a year, Bingo profit !! ".
  • csgohan4
    csgohan4 Posts: 10,587
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    AnotherJoe wrote: »
    Aside all that, it would appear OP would be essentially making a derisory return on it anyway.
    No doubt Dad had a good run for his money from HPI since he bought but those times seem to be over for the next few years.
    I guess OP is simply thinking "mortgage interest on £100k = £5k a year, rent = £9k a year, Bingo profit !! ".

    Short sighted to be honest, some cases eviction can take 1 year, so that's 9K in the red for the op potentially not including decorating costs as they would usually trash the place as well


    I wouldn't touch BTL now IMO, I would invest money elsewhere. Even just a high rate savings account is risk free than a BTL
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
  • Technoholic
    Technoholic Posts: 210
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    I didn't get any notifications of all these replies, but anyway, everyone has a lot of opinions without knowing the circumstances, all of which are valid of course but if it was as simple as that then life would be easy.

    Firstly, yes I own a house with my wife, we have a mortgage.

    I'm aware about the extra SDLT, the tax implications, etc but when it comes to the details, that is what I was asking about.

    I'm not trying to build some massive property empire. I'm trying to work out the way to make the best of a generous gift that I'm potentially being given. The primary reason for me to own any property other than my main residence is so that it can form part of my retirement income/capital.

    For those saying that I will only make minimal profit and only cover costs/taxes in the first few years, well that's fine. I don't really care about making a significant profit right now, this isn't a business investment I'm trying to make, again, I'm trying to accept a gift and make the best outcome of it that I can.

    For those saying I'd be better selling/having my dad sell the property and invest the money or put in a higher interest account - that's all well and good in practice, and if it was purely about money then yes that's the right thing to do, but while it's not a popular opinion around here, there is more emotion involved than just it purely being a business transaction. This is a gift from my dad, he doesn't want to sell the property nor does he just want to give me a load of money in cash. He wants me to buy it and keep it going as it is for now, and as I said, if it was as cold and emotionless as just making the biggest income then it would be ok to take the money and grow it elsewhere, but whether people think it's right or wrong, when it comes to family, there is always the emotional aspect and I wouldn't want it another way. I have my own money/earnings to do that with.

    So basically, the property is staying as it is, it's not being sold off to give me cash, etc etc, so I need to work out the best way, and find out all the tax implications, of buying it at the reduced rate as stated in the OP.

    What I'm seeing is that:

    I need to pay the higher rate of SDLT on the full 200k
    My dad will need to pay CGT based on the 2015 rebasing rules for disposing of residential property.
    I will now pay income tax on the full rental income minus the current tax relief on mortgage interest which is declining over the next couple years until it reaches the new lower level.
    I obviously need to consider the running costs of the property, which I have done (the current agents looking after some of the running will probably be kept initially and their remit extended)

    I appreciate all the advice, but hopefully now you know the situation I can find out if I'm right in my assumptions above.
  • csgohan4
    csgohan4 Posts: 10,587
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    I didn't get any notifications of all these replies, but anyway, everyone has a lot of opinions without knowing the circumstances, all of which are valid of course but if it was as simple as that then life would be easy.

    We can only reply based on the information in your OP, unfortunately there are people on here who give info in drips and drabs and makes it difficult to piece together,

    Your dad will probably need some form of tax advice as he is disposing of his assets and there will be implications for this.
    "It is prudent when shopping for something important, not to limit yourself to Pound land/Estate Agents"

    G_M/ Bowlhead99 RIP
  • Technoholic
    Technoholic Posts: 210
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    csgohan4 wrote: »
    We can only reply based on the information in your OP, unfortunately there are people on here who give info in drips and drabs and makes it difficult to piece together,

    Your dad will probably need some form of tax advice as he is disposing of his assets and there will be implications for this.

    I understand, it's hard to know what information to give up front when you don't know about the topic in the first place, but it should all be there now.

    Yes he will need to get some tax advice, especially because of potential implications for tax due in Germany when he disposes of it, if any
  • AdrianC
    AdrianC Posts: 42,189
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    this isn't a business investment I'm trying to make, again
    YES, IT IS.

    It is 100% a business transaction. Your father is looking to close his business down and sell the business asset. You are looking to buy the business asset and start in the same business. The business is residential letting.

    Sure, you can decide to run an unprofitable business for the sake of emotion if you want, but it makes for a very bad business decision on so many levels...
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    Wow. Second person in a week entering into BTL at a known upfront ongoing loss.
  • Technoholic
    Technoholic Posts: 210
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    AdrianC wrote: »
    YES, IT IS.

    It is 100% a business transaction. Your father is looking to close his business down and sell the business asset. You are looking to buy the business asset and start in the same business. The business is residential letting.

    Sure, you can decide to run an unprofitable business for the sake of emotion if you want, but it makes for a very bad business decision on so many levels...

    You can choose to see it that way if you want. I see it in the same way as if he gifted me an heirloom, that is, I am not looking to make money over and above what I need to cover the outgoings. Anything else is a bonus. The equity in the property is my "gift", subject to external factors, that's all I care to maintain until such time as I need to cash it in for other purposes, or to give to my children etc etc.
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