Use property to pay for private school fees?

by Readers Question

16:00 PM, 1st July 2020
About 10 months ago

Use property to pay for private school fees?

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Use property to pay for private school fees?

Hello, Consider the following scenario:

Person A has £100k to pay towards school fees over the next 5 years. Fees are 20k per year (6,700 x 3 terms). On the basis that Person A has the lump sum up front is there a model, using residential BTL property to fund the fees or at least part of the fees each term with the view of making the overall spend for the 5 years as close £0 as possible.

Assume Person A;
1) is an experienced BTL landlord (residential)
2) will only pay 20% tax ( ie wont be affected by the interest restriction) – simply because combined income from Person A and wife is within the 20% threshold.
3) Assume 5% return each year after maintenance etc but before tax
4) Assume 1% growth over the next 5 years ( before tax, likely not to be any liability)

Many Thanks

Max

Comments

paul thomason

7:55 AM, 2nd July 2020
About 10 months ago

you can start a ltd company which you lend money to it at intrest rate off 20 percent its unsecured , you should be able to get 20 percent return on deposit for btl

Sam Addison

9:11 AM, 2nd July 2020
About 10 months ago

I suspect the taxman will look askance at your ltd. co. paying you 20% interest but I believe that your first £1000 of interest is tax free for both of you.
Try buying 5 houses at 100k each with 80% ltv mortgages in a ltd co. If you can achieve 6% return on value and mortgage rates of 3% you will make 18k p.a. before tax. At 1% growth you will be making 5k p.a. before tax.
In my experience you can manage a higher return on value with cheaper houses.

Roger P

9:18 AM, 2nd July 2020
About 10 months ago

Pay children correct amounts as wages during holidays and deduct from company as expenses then get them to pay their own fees!

Ian Hamilton

10:54 AM, 2nd July 2020
About 10 months ago

Invest in a property ISA returning 7% pa. No hassle, no stress, The House Crowd

Puzzler

7:31 AM, 4th July 2020
About 10 months ago

Try offering the full amount of the fees up front, schools often offer huge discounts if you do this. Simpler and less risky.


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Business rates department £2000 rip off?