Capital gains maize!!

Capital gains maize!!

9:52 AM, 30th January 2017, About 7 years ago 10

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I’m not good with numbers. I’m an illustrator!! But I am also a desperate illustrator (many of us are). I can’t afford to live in my own home despite all the part time jobs I do and the books I publish. I live in a beautiful place by the sea, expensive, much in demand from tourists, but I can’t let it because… well, because I’d be homeless and I’d still have to pay bills on a holiday let… and I wouldn’t earn enough to also rent somewhere myself and pay my own bills.

I wondered about selling up – my flat is valued at £250,000 (might be more now, that was two years ago, might be less), and buying an HMO – then trying to survive on that income and my illustrating. I can’t drive (couldn’t afford a car if I did). I’m literally on the breadline and because I’m old (with no pension, not even a state pension) the value of the flat is absolutely all I have and I can’t afford to cock things up (any more than I already have done).

If I bought an HMO with a return of around £20,000 a year, let it out – and I didn’t own my own home, I lived in separate, rented accommodation myself – where would that put me with capital gains tax and – well, tax in general? Is it doable or would I be taxed so hard that I still couldn’t afford to survive even that way? Capital gains maize

I’m in this state because I was with my wealthy partner for 20 years, but he left me for another (much younger, naturally) woman and we weren’t married, so I had no rights. I had this flat thankfully, so came to live in it. But I am too old to get most of the jobs I apply for, and those I do get – are below basic wage and very menial. I stupidly didn’t have a pension because my ex always told me that he would sort that out for us and we used my money from my books etc to fund other, far less important things.

So now… I’m in an absolute mess at a very tricky age, and any advice would be so, so gratefully received.

Many thanks.

D Gee.

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Mark Alexander - Founder of Property118

10:16 AM, 30th January 2017, About 7 years ago

I do have a few suggestions and questions for you to mull over.

Do you have a spare room in your flat? If so, did you realise that you can let that to a lodger and receive up to £7,500 TAX FREE under the Governments Rent-A-Room scheme?

If you don't have a spare room there may be a way to sell your home and buy one with a spare room. I would need to ask you some more questions about that before I recommend it though. For example; do you have a mortgage on your home and if so what is the outstanding balance, how old are you, have you always lived in the flat or was it previously rented.

Below I have provided an example of a lady who found herself in a very similar situation to yours and came to me for one-to-one consultancy advice.

Let's call her Rita (that's not her real name).

Rita met her partner in 1996 and 10 years later she moved in with him. They were never married. She rented her one bed flat until 2005, which is when they split up and she moved back into it.

Rita hadn't got a spare room, she was financially broke, but her flat (on the South Coast) was worth £200,000.

We worked out how much capital gains she would have to pay if she sold her flat, based on the fact her home had been rented out for 9 years. Thankfully it was a lot less than she thought.

As Rita was in her early 70's we discovered that she qualified for a lifetime mortgage. This is where interest is rolled up indefinitely and is eventually repaid when the property is sold. She would be secure in her home on this basis until the day she died, even if she lived well into her 100's.

The one bed flat was sold, the capital gains tax was paid and the extra money required to make it all happen came from the lifetime mortgage. She purchased a lovely little two bed bungalow and her life long friend who had just lost her husband moved in with her and paid her rent for the spare room. She now has more money (tax free from the rent), a nicer home which is appreciating in value at a higher rate due to the increased value, additional financial security and the added benefit of living with a friend, which means she is never lonely.

For more information about the private consultations I provide please see the link below

LINK >>>

Yvonne Francis

11:28 AM, 30th January 2017, About 7 years ago

Mark: D.Gee did not mention if her flat had been rented out at any time so there would be no capital gains if she sold depending on those circumstances. Capital gains would only be involved if she rented either her own flat or bought another for that purpose and then only if she decided to sell.

I certainly would not recommend HMO's if D. you are near or at retirement age as these are the most difficult of properties to cope with, made worse by all the legislation we are now having to deal with and if you had to rent, then some of this income would be taxed at least 20%.

I think Mark your suggestion of renting a room is good as it's tax efficient if D. has a spare room. However D. have you ever considered AIRbnb. It means you don't need people with you all the time and can offer as much or as little as a host and make good money. Lots of people love doing this. Look it up online.

Mark Alexander - Founder of Property118

11:55 AM, 30th January 2017, About 7 years ago

Reply to the comment left by "Yvonne Francis" at "30/01/2017 - 11:28":

All very good points Yvonne, although I haven't made any assumption one way or the other in terms of the property being rented out previously or not. I did ask the question though because it can make a difference.

The other point I forgot to mention in regards to lifetime mortgages is that income is NOT a qualifying criteria.

I also have an offer for D. Gee to consider if shemight be interested in a private consultation. I would consider trading some of my time for infographics being created exclusively for Property118. I'd also like a nice logo for The Landlords Union and a bit of artwork for our Tax Tutorials page.

Annie Landlord

19:58 PM, 30th January 2017, About 7 years ago

I sympathise, as I am in my 60s and faced a difficult situation last year. If your flat is mortgage free, or you have a lot of equity, could you sell it and buy a place where you could create self contained accommodation for yourself and rent out additional rooms to lodgers?
(A lot of people have done this in Blackpool, where very large houses are dirt cheap) So you wouldn't be getting into the HMO scenario, where the numbers always look inviting but the management can be incredible stressful! With lodgers, you have control over who you get, can have as much or as little to do with them as you like and wouldn't necessarily have to share facilities. Believe that there is always a solution

Yvonne Francis

10:15 AM, 31st January 2017, About 7 years ago

Reply to the comment left by "Annie Landlord" at "30/01/2017 - 19:58":

Hi Annie
You do need a HMO License if you have lodgers. Councils vary but where I am at Oxford a license is required (with all HMO standards) for 3 or more unrelated people, whether or whether not you are resident with them.

Mark Alexander - Founder of Property118

10:19 AM, 31st January 2017, About 7 years ago

Reply to the comment left by "Yvonne Francis" at "31/01/2017 - 10:15":

I wasn't aware of that, where are you based?

Do you have a link to those rules please?

Yvonne Francis

11:53 AM, 31st January 2017, About 7 years ago

Reply to the comment left by "Mark Alexander" at "31/01/2017 - 10:19":

Hi Mark

Councils have different polices in place you have to look on the Councils site in which you are situated. It seems lots of people don't understand this and only the other day someone was saying 5 or more and three stories. I'm based in Oxford and Oxford implemented Article 4 and set the bar at 3 or more, a few years ago with various restrictions depending on the number of stories.

Oxford is particularly draconian because of the running battle they have had with student houses and trying to pin HMO status when the rule was 'single household' (before 2004 act) which is a grey area for students as some live as groups others more separately. They tried to pin HMO on me about 25 years ago and I took them to court. I managed to send them off with a bloody nose but not without it taking a year out of my life and ruining my health. The only good for me was that when the act of 2004 came in I was very knowledgeable and well prepared. I said to the officer in 2004, 'last time you came I needed a hip operation, If I have any grief from you, this time it will be a lip operation'. Must say they have deal with me a bit better.

I don't know Mark if you are interested in HMO issues. You seem very concerned with section 24, a very worthy cause of course but for me, very fortunately, is of no concern. Are there no pressure groups you know of to fight theses Councils. At the moment my son is doing battle with a small house I have given him which has been happily let to 3 students for years and is let to Brookes University who are happy with it. But no the Council say the kitchen is too small but what makes it worse is the way they deal with all this. He was told to put a fire door on the kitchen which he carried out and in the next visit to take it off and put fire doors on other rooms!. Could go on for ever! We may have to cut to 2 and the Council wonder why there is ever increasing homelessness in Oxford.

And finally yes this does apply to resident Landlords. I have a friend who does it in her home and life is made very difficult for her. That's why I suggested AIRbnb as, as yet has no restrictions except in parts of London where the restrictions are down to 90 day only to let, as some areas where turning into floating populations. It's the Uber of the letting business which I'm sure will at some time be restricted. Sorry if this suggestion was treading on your toes in light of the deal you were getting with D.Gee,

Mark Alexander - Founder of Property118

12:16 PM, 31st January 2017, About 7 years ago

Reply to the comment left by "Yvonne Francis" at "31/01/2017 - 11:53":

Hi Yvonne

The whole point of a forum is that nobody has a Monopoly on good ideas. On that basis, you're certainly not treading on any toes 🙂

Yvonne Francis

15:40 PM, 31st January 2017, About 7 years ago

Reply to the comment left by "Mark Alexander" at "31/01/2017 - 12:16":

I'm not the brightest button at getting through links but thought I would try and show you Oxfords policy which confirms what I say.

Mark Alexander - Founder of Property118

15:45 PM, 31st January 2017, About 7 years ago

Reply to the comment left by "Yvonne Francis" at "31/01/2017 - 15:40":

Thank you Yvonne, I will have a read later

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