SteveWallace
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| posted on 21/1/15 at 03:21 PM |
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We are currently renting out a second house which was SWMBO's before we got together. Its in Corsham, so not far from Bath. Due to the
distance, we let it through an agent and we do slightly resent the amount of money they get each month for what mostly appears to be not much work.
On the other hand, they do vet the tenants, hold a security deposit, and do regular inspections. The lessons that we have learnt are:
I) If your letting a property a long way from where you live, budget more than you might first think for repairs. I'm sure most people on here
do their own DIY so its really quite shocking to see what the labour costs are, for even simple work, if your not close enough to do it yourself.
ii) Keep on top of the agents and challenge repair costs. We've ended up insisting that they don't use one of the contractors on their
list as the costs that they were charging for materials was more than what they would have cost even at B&Q. Also, keep a note of when repairs
were done. We've had a couple of instances where work has failed within a year and the Agent would have quite happily charged us to fix it
again had we not been on the ball.
iii) Keep evidence of all costs as you will need to do everything that you can to reduce your profit as you will be taxed on it. Be very careful
about not paying the tax as the HMRC have a focus on getting tax out of landlords at the moment and are issuing fines if you get caught.
iv) If you're paying a mortgage, be aware that most mortgage companies will put up their interest rate if your letting the property
v) keep your tenants happy, not loosing the rental income for a couple of months when you have to change tenants covers a lot of good will in not
arguing about minor stuff. But as Irony says, it is a business, so make those decisions on that basis.
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Irony
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| posted on 22/1/15 at 12:47 PM |
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quote:
Originally posted by cliftyhanger
Yep, that happens from time to time, but well vetted tenants, guarantors etc usually mean that is rarely a major issue. The killer is dead time when
the place is empty (which a bad tenant effectively causes)
As to buying/selling, remember selling a BTL means you pay CGT on all the increase in value, less any capital expendature. That means you cannot
"roll over" the money to teh next place. To me that is a huge hurdle. I can't afford to sell any of my places as I would lose a vast
amount of the capital. And that capital is what means a "better" house with more income. Yes, one day I will have to pay the CGT, but I am
way better off delaying that time as long as possible and enjoying the income. After all, I see the BTL as income, and largely ignore the capital
growth.
My parents are getting old and frail, but own (and have for 50+ years) some letting property. As far as we can make out, if they sell, they will pay
40% of the value straight to the govt. And then when they die, 40% of what is left will be nabbed as inheritance tax. ie they get to keep 36%. I need
to check this, but they believe if they keep the houses, us kids will have to pay the IHT, but will inherit free of any CGT.
You need to be very careful of Capital Gains Tax and Inheritance Tax if your family has any property portfolio. If parents have properties they need
to sign them over to their children asap as inheritance tax doesn't apply if the person 'giving away' the property lives for a
further 7 years. Inheritance Tax can be avoided if things are put into place in good time. It currently stands at 325K. Anything above 325K is
liable to 40% tax.
Capital Gains is a tax that applies to assets other than your official dwelling. It stands a 40% but it can be reduced by quite a few different
methods. My sister has managed to get her capital gains down to 28% with discounts!
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locoboy
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| posted on 22/1/15 at 09:46 PM |
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Irony,
I believe that if parents sign over their property to their kids they need to pay the going rate in rental in order to continue staying in the
property, or the kids have to move back in and have it as their main residence, that's way too easy a loophole just to sign it over and live for
a further 7 years.
Quote from 'thisismoney.co.uk'
You also need to make sure that anything you give away really is a gift. If you sign your home over to your children but carry on living in it,
HMRC won’t accept it was a gift, unless you pay your children a market rent. Read more:
http://www.thisismoney.co.uk/money/pensions/article-2515494/How-help-family-avoid-overpaying-tax-inheritance.html#ixzz3PaamxAqF Follow us: @MailOnline
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ATB
Locoboy
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