Hi All

just interested to know what plans you are making with regard to your properties and the future?Are many of you starting to change to repayment etc or maybe putting your personal properties into a Limited Company? I suppose this is aimed at the older ones(I am 50 ) and the next 10 year plan.

Will for instance you/me be confident that property will be valued at say 50% more than they are tday or not?or will you be able to have enough left in your properties after tax etc?I have a mix the repayment ones do giv me a buzz these days when I see them being paid off..just interested.

Kim 07979690484

Hi Kim,
Long time no see! I have a large portfolio of houses. I am not planning to change my mortgages to repayment. I have 9 properties at the moment where I am advertising for 'Rent to Buy' on 5 to 7 year option, (2 have gone), which will give me brilliant cash flow for the next 5 to 7 years. Why such a short Option? Well I'm 54 and would like a bundle of cash by 60, and they are 'shared' with ex-hubby (he is now a business partner as it made no sence to sell them right now).

I'm holding other properties for the forseeable future as they are in a high yield area and cashflow is brill at the moment. I may sell some of the properties I have in Norwich in around 2014 when I think the market will start to recover.

I have 2 sons and I dont really want to leave a large portfolio to them because of inheritance tax etc...I think you have to plan ahead to a certain degree. Either way, I'm 'tidy' for my old age..

Let me firstly say that I'm no expert but isn't it the case that if you sell your properties (before you die) then you pay capital gains tax (possibly at 40 odd %) on any profit? That profit will then be taxed through inheritance tax when you die. So, selling only means the tax man get two bites of your cherry.

If you hold your properties, you pay zero capital gains upon death and your kids (or whomever) only have inheritance tax to pay on anything over £325,000. Up to £325,000 is zero rated and anything above that is taxed at 40%.

Given that the 40% higher rate taxable income threshold (capital gains included) is currently £35,001 - £150,000, you're better holding the properties in terms of tax efficency. Also the higher rate of 50% kicks in over £150,000 so which ever way you look at it, it's better to hold on to your portfolio.

Unless of course you give them away to your children and hang on (stay alive) for at least seven years - then it's tax free!

No doubt someone who really knows what they're talking about will put me straight here but that's my understanding of the situation.

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If you can fill the unforgiving minute
With sixty seconds worth of distance run,
Yours is the Earth and everything that's in it.

yeah you're right, I guess I wasnt explaining that bit properly...I just meant that I didnt want to leave my lads all that probate stuff to sort through...and actually, I'd like to spend the money myself while Im still alive, lol....
Tax? pay tax? noh never.....

Damn right. You've worked your butt off - maybe time to think about yourself?

__________________
If you can fill the unforgiving minute
With sixty seconds worth of distance run,
Yours is the Earth and everything that's in it.

heyup Heidi hope you are well..I am similar I am not so sure where will all be at in 5 to 10 years time I am 50 now its a bit of a wait and see I am making major good net from rooms although stressful and paying down some of my debt my main portfolio is 4 commercials the rest houses are doing good with low interest rates so ok I also will look at where we are at in 5 years time I would like to hold and pay down all debt by 60 so it is easier to manage and when I gone the kids can have whats left although my Daughter Chelsea wants to start a lettings agency at some point??Whats the figures on the options deals Heidi I may give that a go?

Hello Kim, You have shared such a helpful information about to make investment in property. Thanks a ton!.

Hi Kim,

Ugg, we are getting old!

I'm selling several of my houses as part of the divorce via this route & it's messy financially......

I'm selling at todays market price fixed, with todays market rent fixed, (But with 3 option choices to pay rent or part of 10% fee over the time.

What's in it for me? Great cashflow on the rent. Upfront fee and the knowledge that I dont have to worry about a buyer at the end of it.

What's in it for them? Fixed price and rent for 5 years. They cant get mortgage right now...(Fee comes off the purchase price). Any capitol growth.

It suits me and what I need right now. One going through and 2 just taken up...

Don't know if I explained that well, see this link...this deal is underway...

3 Bed Semi, Bowthorpe, NR5 Heidi Roberts

nice one Heidi we both young at heart..I hope!! Greenwood a pleasure to help in any way I can.

Kim

Hi guys,
Well, for the over 50s (you oldies), I have this idea. I have been reporting P&L of our properties in Ltd Co for some years now. that is part of the longer term strategy. Right now all mortgages are personal, and there is a whacking great big lump that the company owes us as "liabilities". At some point in the future, those "personal BTL" mortgages will be substituted for corporate loans, which don't care how old you are. By that stage, the company will have a competent manager, and we can start to think about giving shares away to the offspring (if they deserve them) but maintain the management and control of the Ltd Co until we get brain disease. If props do continue to increase in price, and there is no reason to think they will not, we intend to just maintain an optimum LTV value within the Ltd Co, and ensure we have net income from the portfolio. By the time we plan on popping the clogs, I would really like the Ltd Co to have effectively no net assets. That way, if the offspring want to work hard to ensure the Ltd Co survives, they can. If they could not be bothered, the management will have the option of buying it out (if they want to). All theoretical, but in my mind a way of avoiding both death taxes and overzealous corporation taxes too. Let the next generation decide what to do with a legal entity.

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Hi Gerry

So are you saying you can have bought in your personal names but report into a Limited Company??Can you point out any other advantages or disadvantages of doing this which frankly sounds a great idea is there advantages of costs etc in a LTD Co or income taken??I would love to screw the tax man when I pop my clogs.

Kim

Kim,
Not sure I can summarize that without an encyclopaedia. Suffice it to say that I took accounting and tax advice when I arrived in the UK 12 years ago, and that our property portfolio is not our only source of UK derived income.

we have run the portfolio for about 9 years combined with consulting income, and the main advantages for me in the past have been not having to be concerned about the tax implications of multiple income streams and not having to have complications of personal tax reporting once the company accounts have been completed each year. For our particular case, it augments the evidence of being exempt from IR35 tax rules, another thing I can't remember (S600?), and sets the scene for the future strategy. The portfolio itself is probably self-sustaining now, so the next migration strategy is to isolate the consulting to a new business, but only within three years of retiring from consulting. At that stage, the UK Ltd Co will become purely a relatively stable property investment company from which to draw a partial pension, with no intent to exceed 2% of capital value extraction per year.
More to do with our lifestyle than anything else, but we have never had to pay the higher tax rate in the UK since we have been here.

Disadvantages include having to report partially VAT exempt services, having no annual capital gains exemption allowance on disposal of properties (though in practice, that has worked to our advantage with only one major disposal some years ago wherein actual tax paid was about half of what I had calculated once it had been through our accountant's ringer.

I hope this helps. since every one of us is unique in terms of our lives, businesses and tax reporting requirements, what seems good for us could be anything but for somebody else.

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Thanks Gerry

Kim

Heidi, if you don't mind me asking, how & where are you finding your TB's ?

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