Use property to pay for private school fees?

by Readers Question

16:00 PM, 1st July 2020
About a month 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 a month 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 a month 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 a month 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 a month ago

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

Puzzler

7:31 AM, 4th July 2020
About a month 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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