mad4x4
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| posted on 11/1/10 at 08:59 PM |
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OT More House Buying Questions
I own Outright a Semi Detached House worth about 200K (inherited it about 18years ago). Lately we have been looking at a Gatehouse (lodge) near by
offers over £150K. I have little assessable capital but lot of equity.
I will also need to get Capital for renevations. (new bathroom/kitchen and windows)
What is the best way to purchase the other House without necessarily selling the Semi. Would like to expand a my property portfolio rather than sell.
Scot's do it better in Kilts.
MK INDY's Don't Self Centre Regardless of MK Setting !
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r1_pete
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| posted on 11/1/10 at 09:18 PM |
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Re Mortgage the semi and buy the gatehouse outright. You should get a better deal as you're effectively a cash buyer, but, you'll need to
look long and hard for a lender who will support you on this.
Get a decent survey though on the gatehouse, if you re mortgage the semi the lender will insist on that being surveyed too.
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Tiger Super Six
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| posted on 11/1/10 at 09:58 PM |
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Two options, as said borrow £150k on the semi and buy it outright and then have 75% loan to value on the semi, or take a small mortgage on the semi to
use as deposit on the new place.
Option 1 is ok but assuming you are going to rent you should really get on a buy to let. If you check the lender first and take the rate whilst you
still live there you should be able to convert the residential mortgage to buy to let but at the more favourable residential mortgage rate.
Option 2 will work that only a small amount will be on a buy to let rate but then you'll have two lots of mortgage fees etc to pay, which is not
ideal!
You will also need to know whether your income will cover £150k mortgage if not you will be able to do it under option 2 but you will need to sort the
figures so your income covers one loan and then the rent covers the other part on the semi
Mark
Tiger Avon
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ravingfool
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| posted on 11/1/10 at 11:08 PM |
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The most important thing to remember is that whatever property you mortgage you need to be able to keep up the repayments, otherwise the lender can
and will repossess the mortgaged property.
I know everyone knows this but interest rates are ridiculously low at the moment and a lot of things appear affordable. Even one half percentage
increase in the base rate could mean a substantial increase in your repayments.
Next week I'm doing a seminar on sucking eggs if anyone is interested.
if you can afford it then the remortgage of your existing property probably makes for an easier life as buy to let mortgages are not such good rates
and a standard residential mortgage will not allow you to let the property which has the mortgage on it.
It also goes without saying that you should never buy a property without a survey.
If you're serious about it go to a solicitor - if you're prepared to spend money on advice you know you're serious, if you're
not then walk away!
ETA - DO NOT GO TO A FACTORY CONVEYENCER! They may be ok on an absolutely bog standard sale & purchase but they are truly a false economy should
there be anything interesting or should you have a non standard transaction which you require advice on like this!
[Edited on 11/1/10 by ravingfool]
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mad4x4
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| posted on 12/1/10 at 09:20 AM |
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One of the problems I was warned about is technically I could be liable to Inheritance tax aswell...... (What a crock) surely this can;t stand after
18 years and would it be based on value now or value 18years ago......
We are arranging a viewing in the next week or so and I will speak to my G/f cousin. Financial advisor / Morgage broker. She has some plans on how
best to do this as we have spoken to her before.
[Edited on 12/101/10 by mad4x4]
Scot's do it better in Kilts.
MK INDY's Don't Self Centre Regardless of MK Setting !
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richardlee237
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| posted on 12/1/10 at 12:12 PM |
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Inheritance tax is payable directly on the deceased's estate and even then the current threshold is 325,000 pounds.
when your relatives estate was wound up any tax should have been dealt with then.
What you may be liable for is Capital Gains Tax on any profit (less first 10,100 pounds, i think ) made on the increase in the value of the property
if it is not your only property and your main property (think MP's switching properties to avoid this tax) CGT is currently 18% I think
[Edited on 12/1/10 by richardlee237]
CGT would only be liable when you sold the property and realised the capital gain.
[Edited on 12/1/10 by richardlee237]
Quote Lord Kelvin
“Large increases in cost with questionable increases in performance can be tolerated only in race horses and women.”
Quote Richard Lee
"and cars"
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Jumpy Guy
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| posted on 12/1/10 at 12:20 PM |
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Slight hijack - Capital Gains Tax
So, I have a house which I rent out while I live in rented accomodation.
If i sell the house, and makle profit, am I liable for CGT?
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richardlee237
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| posted on 12/1/10 at 12:38 PM |
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No, because you would state that it is your main and sole residence, which is temporarily rented out.
The main thing is to show that you are living in the house as your main residence when you sell it.
if you have another property then this can prove difficult and the Inland Revenue would require substantial proof, domestic bills etc. (Unless of
course you are an MP !!!)
There are lots of people who rent out their own and only house while working abroad and are not (as far as I know ) charged CGT if and when they
sell.
See the Dir gov website, linky dinky below
CGT Linky
Quote Lord Kelvin
“Large increases in cost with questionable increases in performance can be tolerated only in race horses and women.”
Quote Richard Lee
"and cars"
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richardlee237
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| posted on 12/1/10 at 12:47 PM |
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Quick correction to my previous post .
The tax exemption applies to people working abroad and letting NOT to people letting their property and working in UK
BUT you may be able to argue this with your tax office
Quote Lord Kelvin
“Large increases in cost with questionable increases in performance can be tolerated only in race horses and women.”
Quote Richard Lee
"and cars"
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mad4x4
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| posted on 12/1/10 at 12:52 PM |
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If I have this right then....
If I sell a house (that i'm not Living in but own) then I'm liable for CGT if I pocket the CASH.
As for Inheritance tax that's all done and dusted at TOD (Time of Death). - Yeah?
if so COOL
Scot's do it better in Kilts.
MK INDY's Don't Self Centre Regardless of MK Setting !
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Jumpy Guy
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| posted on 12/1/10 at 12:53 PM |
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Thanks for checking- Im surprised - this had never occurred to me
How woudl the tax office know?
Until you mentioned it, it would never have occured to me at all
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David Jenkins
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| posted on 12/1/10 at 12:58 PM |
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quote:
Originally posted by mad4x4
As for Inheritance tax that's all done and dusted at TOD (Time of Death). - Yeah?
This is all part of probate - the executor/solicitor collects all the money in the estate, pays off all debts outstanding (including taxes), then
distributes everything according to the will. Nothing can be paid out until everything is sorted.
That's the official line - but cock-ups are not unknown...
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richardlee237
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| posted on 12/1/10 at 01:39 PM |
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The purpose of the legislation is to prevent you buying and selling houses to make money on the deals.
Grey areas come in when you rent out your house, say in Scotland, to go and work in London. You cannot sell your house at a reasonable price but you
can let it to get some income to pay 5% of the London rent.
The first thing to realise is that you are liable for income tax on the rent you receive and if the property increases in value then this is liable to
CGT when the asset is disposed of.
If you are proposing to rent out property then you must take independent (paid for) advice and employ an accountant. (and thus avoid mistakes like I
made in my previous post)
Variation in property prices make CGT pretty painful if you cannot prove exemption.
Final point, if any death duties on the property willed to you were not paid at the time then I am sure this would be tax evasion and as such you
would be subject to a severe rogering by Alistair Darling
Quote Lord Kelvin
“Large increases in cost with questionable increases in performance can be tolerated only in race horses and women.”
Quote Richard Lee
"and cars"
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