UK Landlord Forum / Life

I have a 3 bedroom flat approx £300,000 which has a good rental potential (£1500/ m). The property is mortgage free and is only on my name.

What would be my best option:
- Get a mortgage (£500 K) on me and my wife name and buy another property. Rent property 1 and get a rental income of £1500. But this rent will be taxable (40%).
- Give this property to my son ( who is 15 years old). Buy another property with a mortgage. Then I (my son) may save tax on the rental income.
- Remortgage property 1 but I understand even with remortgage I will have to pay tax on entire £1500. Is this correct so approx £600 tax every month
- Sell the property and buy another one.

Thanks

Or stay in your 3 bedroom flat and live the high life, without mortgage worries. Should be a good laugh. Let your son make his own way in life (of course)... good for him.

Quote from: mutenmax on January 11, 2019, 05:04:55 PM
I have a 3 bedroom flat approx £300,000 which has a good rental potential (£1500/ m). The property is mortgage free and is only on my name.

What would be my best option:
- Get a mortgage (£500 K) on me and my wife name and buy another property. Rent property 1 and get a rental income of £1500. But this rent will be taxable (40%).
OK, just slow down a bit there ..... yes if you go over the threshold it will be the higher tax bracket HOWEVER this is on your TAXABLE income, check what this actually means.

- Give this property to my son ( who is 15 years old). Buy another property with a mortgage. Then I (my son) may save tax on the rental income.
No. Just no. Even if it was legally possible.


- Remortgage property 1 but I understand even with remortgage I will have to pay tax on entire £1500. Is this correct so approx £600 tax every month
See above

- Sell the property and buy another one.
Think about what you want to achieve if you did this? Would you buy a smaller place and invest the equity? You may wish to consult your wife and or son .....

Thanks

Without a full understanding of all your other finances and most importantly age - retirement plans etc then impossible to get advice from a forum.

Other than
1. If the flat is worth 300K then how come you would raise 500K on it? Not sure that works
2. you cannot have an owner of property less than 18 years old. So this doesn't work - As an aside even if you made the son a beneficiary the taxman would tax it as your income anyway
3. If you remortgage what would you do with the money? Why would you remortgage?
4.same goes for this option (as eps501 asks) what's the point of this....

I'm afraid you need to sit with an advisor or other knowledgable person with whom you can discuss this in more detail - not a forum.

I am so risk averse that the idea of any new mortgage involving my own home would scare me witless.Apparently a large number of people past retirement age have still got a mortgage.I had  mortgages on the 4 of the  5 rentals,but 3 of these have been paid off over time,from rental profits,and the remaining one should easily be covered.I know I have been overly cautious,and could have built up a bigger portfolio,but I would rather play safe.Are you having a midlife crisis,wanting to stir things up a bit ? 

I have a good deposit 150 K and if I give 1st property (which is mortgage free) on rent can get £1500/ m. I am 40 now and both I and my wife works with good credit rating so can easily secure at least 500k mortgage.

So I feel if I transfer 1st property on my son's name, and take 2nd property on mortgage, I can save money on tax otherwise I am a high rate taxpayer and 1st property is in my name.

Or sell this property and but a bigger property may be £800 K

Quote from: mutenmax on January 14, 2019, 10:22:11 AM
I have a good deposit 150 K and if I give 1st property (which is mortgage free) on rent can get £1500/ m. I am 40 now and both I and my wife works with good credit rating so can easily secure at least 500k mortgage.
-All well and good but consider as you both get older, are your jobs secure, are you able to change jobs easily, and as has been mentioned above, do you really want to have a big mortgage going forward?

So I feel if I transfer 1st property on my son's name, and take 2nd property on mortgage, I can save money on tax otherwise I am a high rate taxpayer and 1st property is in my name.
-It's not legal at least in UK as far as I know, to transfer property to anyone below 18 years old.
If your aim is to reduce tax then you need to find other ways. Any decent financial adviser or accountant can give you at least the basics then you can choose to find more specialist advice.

Or sell this property and but a bigger property may be £800 K
-Again, what is your goal in doing this, just to increase the size of your home as an asset?
It really is impossible to give you any actual advice on such vague points you make, sorry.