Do I Pay Capital Gains On This?

[jamandco]

Hi All

I stand to make around £100,000 profit on my home after living in it for the past 15 years,

the question I need answering is this please

If I take that profit and put it all down as a deposit on my next place of residence ( my home)

do I still have to pay capital gains tax on the profit, and if so why?

thanks again everyone

Michael

[Simon Dewsberry]

HI Michael

There is no Capital Gains payable on the sale of your " home " or "main place of residence" unless at some time you have let it to tenants - even then with reliefs and the time period of 15 years it will be minimal- If you have never let it out - there is no CG to pay.

If you are going to take the 100k (equity out) and move - but keep the original property and let it, then at a later date when you sell it, CG may become payable at that time - Interestingly i believe that if you do this and sell no later than 3 years after you move out no CG will be payable on the sale (of the original property)- this is becasue it was at one time your main residence and there is a 3 year allowance for this (you living there).

This is a farily simple view and you should seek more a detailed analysis.

Hope that makes sense !

Simon

PS If you have 100k burning a hole in your pocket why not put 50k dep on the "new home " and use the other 50k to get yourself some BTL property - 50 k as a deposit on BTL will allow you to lend a further 283k (giving you 333k to spend on props) the rental income and equity growth from the BTLs will give you a much more rosy financial future - depending on personal circumstances and your ability to buy the "right " BTL props! ( sorry I'm off on one again !!!)

[jamandco]

HI Michael

There is no Capital Gains payable on the sale of your " home " or "main place of residence" unless at some time you have let it to tenants - even then with reliefs and the time period of 15 years it will be minimal- If you have never let it out - there is no CG to pay.

If you are going to take the 100k (equity out) and move - but keep the original property and let it, then at a later date when you sell it, CG may become payable at that time - Interestingly i believe that if you do this and sell no later than 3 years after you move out no CG will be payable on the sale (of the original property)- this is becasue it was at one time your main residence and there is a 3 year allowance for this (you living there).

This is a farily simple view and you should seek more a detailed analysis.

Hope that makes sense !

Simon

PS If you have 100k burning a hole in your pocket why not put 50k dep on the "new home " and use the other 50k to get yourself some BTL property - 50 k as a deposit on BTL will allow you to lend a further 283k (giving you 333k to spend on props) the rental income and equity growth from the BTLs will give you a much more rosy financial future - depending on personal circumstances and your ability to buy the "right " BTL props! ( sorry I'm off on one again !!!)

HI Michael

There is no Capital Gains payable on the sale of your " home " or "main place of residence" unless at some time you have let it to tenants - even then with reliefs and the time period of 15 years it will be minimal- If you have never let it out - there is no CG to pay.

If you are going to take the 100k (equity out) and move - but keep the original property and let it, then at a later date when you sell it, CG may become payable at that time - Interestingly i believe that if you do this and sell no later than 3 years after you move out no CG will be payable on the sale (of the original property)- this is becasue it was at one time your main residence and there is a 3 year allowance for this (you living there).

This is a farily simple view and you should seek more a detailed analysis.

Hope that makes sense !

Simon

PS If you have 100k burning a hole in your pocket why not put 50k dep on the "new home " and use the other 50k to get yourself some BTL property - 50 k as a deposit on BTL will allow you to lend a further 283k (giving you 333k to spend on props) the rental income and equity growth from the BTLs will give you a much more rosy financial future - depending on personal circumstances and your ability to buy the "right " BTL props! ( sorry I'm off on one again !!!)

[jamandco]

Many thanks for this simon, the reason I'd planned to pay 100k down on a new home is to reduce the immediate heavy mortgage costs on the remaining £150k .. ish loan amount of the new property.

Any further ideas on creative approaches to financing ( like the one you mention) would be very welcome .

thanks again for your time.

Michael

[plym77]

Hi Jamandco

Just a quick response to your query and Rodents comments

Rodent is right. By virtue of having lived in a property at some point as your main residence, the last 26 months is exempt as a proportion of the whole period, ie, if you own a property for 15 years and let it for the last four years then only one year would be subject to CGT. On top of the PPR exemption there is also lettings relief - up to a maximum of £40k per owner (can be helpful with planning and married couples/civil partners - the relief avaiable depending on a number of factors), also, taper relief, indexation and an annual exemption may be available.

All in all there are a few reliefs avaiable to you so even after three years of leaving the property, it is possible that CGT would not be payable for some time after that point on a sale.

Regards

Sherena Glanton CTA

[Simon Dewsberry]

Hi Michael

Yep Let's get creative !

First - check out offset "virgin one " type mortgages which let you use your house like a bank acc ( i have mine with BOS who were most competitive at the time 1% over BoE for life of loan - not a stunning rate but gives me access to huge amounts of instant cash !)

Basically they give you an Overdraft limit set by a fig which is 85 % of the val of your house £85k on £100K prop - you can then pay cash in amd out as often as you like and onl pay interest (daily) on the outstanding balance. This tool alone gives you imense flexibility.

The extra good news with this is that it is self certified so you dont need to prove your income and can get a much larger loan than with traditional high st mortgages( It remains your responsibility to make sure you can afford to maintain payments however)most lenders have them but dont promote them too heavily.

Now any spare cash you have can be "paid off" or "into" your Offset acc which is running at over 6% with no fees for "paying early"

Got no spare cash ? do you want some - do you want lots !!?

I know a place where there are millions waiting to be collected for free- Where ? well the guys who are trying to give it away spend millions every year on mail shots, newpaper adverts, online adverts etc.

This gives massive fleibility at all levels as any spare cash i have doesn't go into "internet high interest accounts" 5.3% ish i believe at present, or even ISA's ( what a con they are !!!) your 5.3 will get taxed down by 22% or for 40% so barely keeping up with inflation - your Isa will do a little better - NOPE put it in your offset acc - and get a whopping 6.5 %(or what ever rate your mortgage is running at)on it (plus you can compound this up to work out the savings you make as you wont be paying interest on this particular bit for the rest of the mortgage term- too complex for here !) also our friend Mr Brown has not come up with a way to tax a mortgage payment yet -so no tax - and you are not limited to 3k as you are with a cash ISA

Cant see why any one would do it any other way - I currently have just over £100,000 on 0% credit cards sat in my mortgage acc saving me an absolute fortune in interest (6,500pa thanks Mr Credit card!)see below-

If raising a bigger deposit is an issue for anyone then do what most of my aquaintances have done - become a professional credit card "tart"

FREE CASH !!

Start applying for all those 0% credit card deals that come thru your door every day instead of throwing them in the bin - i have maintained a balance in excess of £100,000 (accross several- well actually lots of cards!) for nearly 5 years -NEVER PAYING A PENNY IN INTEREST !! it should be said at this point that this is not for idiots - you need to be disiplined and organised and RESPONSIBLE to play this game(it is a big boy game with big boy rules and if you break those rules you are going to feel some big boy pain!!!) -

Now if you want to reduce the "Heavy Mortgage"commitment you could easily get 50k on cards (at 0%) If you have a partner that is only 25K each - the trick is to ASK for a high limit, most people applying dont even ask for a limit they just fill in their personal details! and then surprise surprise- get given a £1k- £3K limit - the place to "request " a high limit is when they ask if you would like a blance transfer- Yes you would ask for around £20,000 - they can (and probably will say No !) but they will give £5k or £or £12k etc (depending on your circumstances)

I have one card which 6 years ago had a credit limit of £3k which now has Limit £61k Because i keep paying them back in full, on time; always - I also ALWAYS ask for a credit increase - there are clever ways of doing this as well - but that is for another time !

If You and your partner get 3 cards each at around £8K per card there's your £50 k - (for 6 months - then apply for more cards - there are 100's of them ) You can use this for your BTL props if you want or to reduce your mortgage payments. Keep dong this for several years and you will be astounded by how much "free money"you can have both making you profit and saving you on interest payments.

Now buy some more prop - The equity growth on 330K is around £16k per ( not guaranteed !!!) and on top of this "net" rental profit of around 2-3%(of market value) adds another 6k-9k pa to your net worth - Approx 25k That's 50% profit on the 50 K you started with PER YEAR! (this should make that "Heavy" mortgage quite a lot lighter!!!LOL)

and guess what - if you do it with credit card money your stake was ZERO - just the cost of a phone call to apply for the card --NOPE most CC app lines are freephone numbers !!! Now wouldn't that be a good a story!!!!!

If you know an easier way to make this sort of money on minimal effort PLEASE LET ME KNOW !

Also look at your BTL prop carefully - see below!

When getting involved in any kind of investment - best and worst case scenarios should always be considered. Even more so if this is your biggest investment, which for most it will be.

The advice i was given when i bought my first property was to go and look at 100 properties b4 you evenmake an offer. if you are thinking 2 bed flat then look at 100 2 bed flats, 4 bed house then go look at 100 4 bed houses - in the area you want to buy.

After you have done this you will be able to value a property more accurately than an estate agent !

Use your ears and mouth in the proportions god gave them to you - and listen for signals indicating motivated sellers - bereavments, divorce, splits, debts, reposessions, downsizing, bridging loans, vacant possessions etc

Look at properties with scope to improve or get more income from -

an end tce is usually better than a mid tce -more scope for conversion to flats - billboard on side wall ( i have managed to acquire 3 with billboards which produce an extra £1500pa each from sign rent!)

rear lane access as opposed to no rear access

garage or space to build garage

there is a huge list of "extra merits" to look for

Get to know the estate agents in your area - you will anyway when you look at 100 props!

Only when you done your research and have checked your maths to make sure you are clearing an absolute min 8% rtn then start making offers - silly offers ! but if it desn't add up dont walk - RUN away.

I usually offer around 20% less than the asking price/market value - which i fully expect to be rejected and usually is !

but on 2 ocassions it wasn't and i got 2 bargains. Tell the estate agents that financing is in place you are in a position to exchange within 10 days and complete within 28 days(and be sure you are in this position!). This will go a long way in closing the deal especially when you have a couple of houses and the est agent knows you are serious ! Estate agents regularly ring me now - b4 boards even go on houses !

I have 30 properties and have only ever paid the asking price once and that was only because the estate agent had seriously undervalued it !

I hope any one reading this can at least use some of it to improve their lifestyle in some way if not change your life entirely !! I used it to move from staying with my girlfriend in a council flat to moving into a 4 bed detached with 1/4 acre -and with large annex containing indoor pool, jacuzzi, sauna and bar. No boasting - hopefully inspiration to any one who feels trapped with conventional approaches blocking their every move - by doing this and various other lateral moves in 6 years came from being £22,000 in debt to sitting on a £5million portfolio!!! so yes it does work !!( A LOT OF MY FRIENDS HAVE ALSO DONE THE SAME)

THINK OUT OF THE BOX -there is always another way .

Michael hope this keeps you awake at night !! until you work out what you are going to do !!!!

Things dont change until you change - Your mind is like a parachute - only works when it is open!

The above is not a PLAN just a few ideas to get you thinking!

Til later

Simon

[jamandco]

Hi Michael

Yep Let's get creative !

First - check out offset "virgin one " type mortgages which let you use your house like a bank acc ( i have mine with BOS who were most competitive at the time 1% over BoE for life of loan - not a stunning rate but gives me access to huge amounts of instant cash !)

Basically they give you an Overdraft limit set by a fig which is 85 % of the val of your house £85k on £100K prop - you can then pay cash in amd out as often as you like and onl pay interest (daily) on the outstanding balance. This tool alone gives you imense flexibility.

The extra good news with this is that it is self certified so you dont need to prove your income and can get a much larger loan than with traditional high st mortgages( It remains your responsibility to make sure you can afford to maintain payments however)most lenders have them but dont promote them too heavily.

Now any spare cash you have can be "paid off" or "into" your Offset acc which is running at over 6% with no fees for "paying early"

Got no spare cash ? do you want some - do you want lots !!?

I know a place where there are millions waiting to be collected for free- Where ? well the guys who are trying to give it away spend millions every year on mail shots, newpaper adverts, online adverts etc.

This gives massive fleibility at all levels as any spare cash i have doesn't go into "internet high interest accounts" 5.3% ish i believe at present, or even ISA's ( what a con they are !!!) your 5.3 will get taxed down by 22% or for 40% so barely keeping up with inflation - your Isa will do a little better - NOPE put it in your offset acc - and get a whopping 6.5 %(or what ever rate your mortgage is running at)on it (plus you can compound this up to work out the savings you make as you wont be paying interest on this particular bit for the rest of the mortgage term- too complex for here !) also our friend Mr Brown has not come up with a way to tax a mortgage payment yet -so no tax - and you are not limited to 3k as you are with a cash ISA

Cant see why any one would do it any other way - I currently have just over £100,000 on 0% credit cards sat in my mortgage acc saving me an absolute fortune in interest (6,500pa thanks Mr Credit card!)see below-

If raising a bigger deposit is an issue for anyone then do what most of my aquaintances have done - become a professional credit card "tart"

FREE CASH !!

Start applying for all those 0% credit card deals that come thru your door every day instead of throwing them in the bin - i have maintained a balance in excess of £100,000 (accross several- well actually lots of cards!) for nearly 5 years -NEVER PAYING A PENNY IN INTEREST !! it should be said at this point that this is not for idiots - you need to be disiplined and organised and RESPONSIBLE to play this game(it is a big boy game with big boy rules and if you break those rules you are going to feel some big boy pain!!!) -

Now if you want to reduce the "Heavy Mortgage"commitment you could easily get 50k on cards (at 0%) If you have a partner that is only 25K each - the trick is to ASK for a high limit, most people applying dont even ask for a limit they just fill in their personal details! and then surprise surprise- get given a £1k- £3K limit - the place to "request " a high limit is when they ask if you would like a blance transfer- Yes you would ask for around £20,000 - they can (and probably will say No !) but they will give £5k or £or £12k etc (depending on your circumstances)

I have one card which 6 years ago had a credit limit of £3k which now has Limit £61k Because i keep paying them back in full, on time; always - I also ALWAYS ask for a credit increase - there are clever ways of doing this as well - but that is for another time !

If You and your partner get 3 cards each at around £8K per card there's your £50 k - (for 6 months - then apply for more cards - there are 100's of them ) You can use this for your BTL props if you want or to reduce your mortgage payments. Keep dong this for several years and you will be astounded by how much "free money"you can have both making you profit and saving you on interest payments.

Now buy some more prop - The equity growth on 330K is around £16k per ( not guaranteed !!!) and on top of this "net" rental profit of around 2-3%(of market value) adds another 6k-9k pa to your net worth - Approx 25k That's 50% profit on the 50 K you started with PER YEAR! (this should make that "Heavy" mortgage quite a lot lighter!!!LOL)

and guess what - if you do it with credit card money your stake was ZERO - just the cost of a phone call to apply for the card --NOPE most CC app lines are freephone numbers !!! Now wouldn't that be a good a story!!!!!

If you know an easier way to make this sort of money on minimal effort PLEASE LET ME KNOW !

Also look at your BTL prop carefully - see below!

When getting involved in any kind of investment - best and worst case scenarios should always be considered. Even more so if this is your biggest investment, which for most it will be.

The advice i was given when i bought my first property was to go and look at 100 properties b4 you evenmake an offer. if you are thinking 2 bed flat then look at 100 2 bed flats, 4 bed house then go look at 100 4 bed houses - in the area you want to buy.

After you have done this you will be able to value a property more accurately than an estate agent !

Use your ears and mouth in the proportions god gave them to you - and listen for signals indicating motivated sellers - bereavments, divorce, splits, debts, reposessions, downsizing, bridging loans, vacant possessions etc

Look at properties with scope to improve or get more income from -

an end tce is usually better than a mid tce -more scope for conversion to flats - billboard on side wall ( i have managed to acquire 3 with billboards which produce an extra £1500pa each from sign rent!)

rear lane access as opposed to no rear access

garage or space to build garage

there is a huge list of "extra merits" to look for

Get to know the estate agents in your area - you will anyway when you look at 100 props!

Only when you done your research and have checked your maths to make sure you are clearing an absolute min 8% rtn then start making offers - silly offers ! but if it desn't add up dont walk - RUN away.

I usually offer around 20% less than the asking price/market value - which i fully expect to be rejected and usually is !

but on 2 ocassions it wasn't and i got 2 bargains. Tell the estate agents that financing is in place you are in a position to exchange within 10 days and complete within 28 days(and be sure you are in this position!). This will go a long way in closing the deal especially when you have a couple of houses and the est agent knows you are serious ! Estate agents regularly ring me now - b4 boards even go on houses !

I have 30 properties and have only ever paid the asking price once and that was only because the estate agent had seriously undervalued it !

I hope any one reading this can at least use some of it to improve their lifestyle in some way if not change your life entirely !! I used it to move from staying with my girlfriend in a council flat to moving into a 4 bed detached with 1/4 acre -and with large annex containing indoor pool, jacuzzi, sauna and bar. No boasting - hopefully inspiration to any one who feels trapped with conventional approaches blocking their every move - by doing this and various other lateral moves in 6 years came from being £22,000 in debt to sitting on a £5million portfolio!!! so yes it does work !!( A LOT OF MY FRIENDS HAVE ALSO DONE THE SAME)

THINK OUT OF THE BOX -there is always another way .

Michael hope this keeps you awake at night !! until you work out what you are going to do !!!!

Things dont change until you change - Your mind is like a parachute - only works when it is open!

The above is not a PLAN just a few ideas to get you thinking!

Til later

Simon

Hi Michael

Yep Let's get creative !

First - check out offset "virgin one " type mortgages which let you use your house like a bank acc ( i have mine with BOS who were most competitive at the time 1% over BoE for life of loan - not a stunning rate but gives me access to huge amounts of instant cash !)

Basically they give you an Overdraft limit set by a fig which is 85 % of the val of your house £85k on £100K prop - you can then pay cash in amd out as often as you like and onl pay interest (daily) on the outstanding balance. This tool alone gives you imense flexibility.

The extra good news with this is that it is self certified so you dont need to prove your income and can get a much larger loan than with traditional high st mortgages( It remains your responsibility to make sure you can afford to maintain payments however)most lenders have them but dont promote them too heavily.

Now any spare cash you have can be "paid off" or "into" your Offset acc which is running at over 6% with no fees for "paying early"

Got no spare cash ? do you want some - do you want lots !!?

I know a place where there are millions waiting to be collected for free- Where ? well the guys who are trying to give it away spend millions every year on mail shots, newpaper adverts, online adverts etc.

This gives massive fleibility at all levels as any spare cash i have doesn't go into "internet high interest accounts" 5.3% ish i believe at present, or even ISA's ( what a con they are !!!) your 5.3 will get taxed down by 22% or for 40% so barely keeping up with inflation - your Isa will do a little better - NOPE put it in your offset acc - and get a whopping 6.5 %(or what ever rate your mortgage is running at)on it (plus you can compound this up to work out the savings you make as you wont be paying interest on this particular bit for the rest of the mortgage term- too complex for here !) also our friend Mr Brown has not come up with a way to tax a mortgage payment yet -so no tax - and you are not limited to 3k as you are with a cash ISA

Cant see why any one would do it any other way - I currently have just over £100,000 on 0% credit cards sat in my mortgage acc saving me an absolute fortune in interest (6,500pa thanks Mr Credit card!)see below-

If raising a bigger deposit is an issue for anyone then do what most of my aquaintances have done - become a professional credit card "tart"

FREE CASH !!

Start applying for all those 0% credit card deals that come thru your door every day instead of throwing them in the bin - i have maintained a balance in excess of £100,000 (accross several- well actually lots of cards!) for nearly 5 years -NEVER PAYING A PENNY IN INTEREST !! it should be said at this point that this is not for idiots - you need to be disiplined and organised and RESPONSIBLE to play this game(it is a big boy game with big boy rules and if you break those rules you are going to feel some big boy pain!!!) -

Now if you want to reduce the "Heavy Mortgage"commitment you could easily get 50k on cards (at 0%) If you have a partner that is only 25K each - the trick is to ASK for a high limit, most people applying dont even ask for a limit they just fill in their personal details! and then surprise surprise- get given a £1k- £3K limit - the place to "request " a high limit is when they ask if you would like a blance transfer- Yes you would ask for around £20,000 - they can (and probably will say No !) but they will give £5k or £or £12k etc (depending on your circumstances)

I have one card which 6 years ago had a credit limit of £3k which now has Limit £61k Because i keep paying them back in full, on time; always - I also ALWAYS ask for a credit increase - there are clever ways of doing this as well - but that is for another time !

If You and your partner get 3 cards each at around £8K per card there's your £50 k - (for 6 months - then apply for more cards - there are 100's of them ) You can use this for your BTL props if you want or to reduce your mortgage payments. Keep dong this for several years and you will be astounded by how much "free money"you can have both making you profit and saving you on interest payments.

Now buy some more prop - The equity growth on 330K is around £16k per ( not guaranteed !!!) and on top of this "net" rental profit of around 2-3%(of market value) adds another 6k-9k pa to your net worth - Approx 25k That's 50% profit on the 50 K you started with PER YEAR! (this should make that "Heavy" mortgage quite a lot lighter!!!LOL)

and guess what - if you do it with credit card money your stake was ZERO - just the cost of a phone call to apply for the card --NOPE most CC app lines are freephone numbers !!! Now wouldn't that be a good a story!!!!!

If you know an easier way to make this sort of money on minimal effort PLEASE LET ME KNOW !

Also look at your BTL prop carefully - see below!

When getting involved in any kind of investment - best and worst case scenarios should always be considered. Even more so if this is your biggest investment, which for most it will be.

The advice i was given when i bought my first property was to go and look at 100 properties b4 you evenmake an offer. if you are thinking 2 bed flat then look at 100 2 bed flats, 4 bed house then go look at 100 4 bed houses - in the area you want to buy.

After you have done this you will be able to value a property more accurately than an estate agent !

Use your ears and mouth in the proportions god gave them to you - and listen for signals indicating motivated sellers - bereavments, divorce, splits, debts, reposessions, downsizing, bridging loans, vacant possessions etc

Look at properties with scope to improve or get more income from -

an end tce is usually better than a mid tce -more scope for conversion to flats - billboard on side wall ( i have managed to acquire 3 with billboards which produce an extra £1500pa each from sign rent!)

rear lane access as opposed to no rear access

garage or space to build garage

there is a huge list of "extra merits" to look for

Get to know the estate agents in your area - you will anyway when you look at 100 props!

Only when you done your research and have checked your maths to make sure you are clearing an absolute min 8% rtn then start making offers - silly offers ! but if it desn't add up dont walk - RUN away.

I usually offer around 20% less than the asking price/market value - which i fully expect to be rejected and usually is !

but on 2 ocassions it wasn't and i got 2 bargains. Tell the estate agents that financing is in place you are in a position to exchange within 10 days and complete within 28 days(and be sure you are in this position!). This will go a long way in closing the deal especially when you have a couple of houses and the est agent knows you are serious ! Estate agents regularly ring me now - b4 boards even go on houses !

I have 30 properties and have only ever paid the asking price once and that was only because the estate agent had seriously undervalued it !

I hope any one reading this can at least use some of it to improve their lifestyle in some way if not change your life entirely !! I used it to move from staying with my girlfriend in a council flat to moving into a 4 bed detached with 1/4 acre -and with large annex containing indoor pool, jacuzzi, sauna and bar. No boasting - hopefully inspiration to any one who feels trapped with conventional approaches blocking their every move - by doing this and various other lateral moves in 6 years came from being £22,000 in debt to sitting on a £5million portfolio!!! so yes it does work !!( A LOT OF MY FRIENDS HAVE ALSO DONE THE SAME)

THINK OUT OF THE BOX -there is always another way .

Michael hope this keeps you awake at night !! until you work out what you are going to do !!!!

Things dont change until you change - Your mind is like a parachute - only works when it is open!

The above is not a PLAN just a few ideas to get you thinking!

Til later

Simon

Phew what a scorcher Simon, my brains all a sizzle ! I'd better get my trunks out because my minds begun swimming, thanks again for all this valuable info, dont quite know how long it'll take to sink in but I know I will DEFINITELY use it.... and soon

regards

Michael

[Simon Dewsberry]

Another point on TAX - normally you cannot deduct the cost of your personal mortgage from income BUT if you keep the original property and remortgage for an extra 100k then let it out , flip the original mortgage to btl and use the 100k to purchase more btl them 100% of Mort payments become deductable against profits !

Plym??

Then use your new found rental income to pay your new personal mortgage, in full hopefully, with enough over for a nice little holiday each year - free house - holidays - and a nice portfolio accumulating -what more could you ask for ?!

Then do it again and again !

Well - that's the theory !

What do you think ?

[jamandco]

Another point on TAX - normally you cannot deduct the cost of your personal mortgage from income BUT if you keep the original property and remortgage for an extra 100k then let it out , flip the original mortgage to btl and use the 100k to purchase more btl them 100% of Mort payments become deductable against profits !

Pym??

Then use your new found rental income to pay your new personal mortgage, in full hopefully, with enough over for a nice little holiday each year - free house - holidays - and a nice portfolio accumulating -what more could you ask for ?!

Then do it again and again !

Well - that's the theory !

What do you think ?

[jamandco]

What do I think!!!!!!, well what should anyone think, I'm gobsmacked that so many routes exist for where I want to be in a few years time. This is really making me re-evaluate how Im going about building my

port folio (curently 3). The deal I mentioned for our NEW HOME wont be happening just yet as the house we had our eye on went up as sale agreed today, its probably a blessing in disguise though as we didnt have a clue these techniques even existed, and now we do know.... I'm going to do as much homework on it as possible and make them work for me and my family before we buy our next home. I really like the idea of remortgaging our current home instead of selling, and renting it out and raising money for deposits on PPR as well as BTL's. thanks a million for this advice Simon, this will save and make us thousands I'm sure

Michael

[russ295]

rodent.

do you get hit with the balance transfer fee,

russ

[Simon Dewsberry]

Hi Russ

Unfortunately that is becoming more common especially in the past 12 months or so ! It used to be capped at £30, £50 etc but now we are seeing anthing from zero to 3% on tx fees - There are ways around this, which if you position yourself correctly can mean you avoid the charges altogether !

For eg MBNA currently have a 12 month deal on giving 0% no fees but only on PURCHASES not BAL TX (incidentiallyMBNA are the best credit card co in the world in my opinion as they have a set of rules tailored made for this ((HINT!))- As i have posted elsewhere - i am in the fortunate position of having a PDQ (credit debit card machine) for taking rent and customer payments in my shop - so easy for me - i just swipe my card thru my own machine ! ZERO fees - cash now available ! (i actually will get fees from my PDQ supplier -1.5% but when i pay the card down at the end of the 0% period i wont be sending a cheque i will refund the money back thru the pdq and then get the 1.5% credited back to me !!

Not many people will be in this position though!

So how can we get around this - well i dont see any problem with Mr X getting his wife to set up a paypal acc (or similar)in her name and then pay her from his card to her PP acc - which is then tx direct to her bank acc and is now cash (for purchase deals not bal tx deals)(this will avoid cc fees but get you pp fees)clearly all of these fees need to be factored into your overall figures!

There are some out there that will charge you 3% for a measly 3 month at a supposed 0% which pro ratas out at 12 pa - AVOID THESE !

It is actually worse than it sounds - because the fee will be tucked behind your balance - not at 0% but at the cards normal apr of 8%-20%

with the "fee" attracting interest all the way thru the "offer" time and being the very last part of your outstanding balance to get paid off! ( they are wising up!)

Basically it is like prop - the deals are still out there - you just need to look a it harder to get what you need"

A good place to get a feel for what is going on is

http://www.moneysavingexpert.com/creditcards

Run by martin lewis (radio 2 - BBC) excellent ideas and info - but not a masterplan! you need to use all of some ideas-some of others, bits of the opposite logic ,along with everthing i have said in this thread and a whole lot more bedsides if you want to really get stunning results !

But its great - you learn as earn. I could quite literally write a book on it - maybe i will one day !

I guess the only way to completely avoid BAl tx fees now is to use a provider who doen't charge them or look for a deal where they are capped at an accpetable figure - the last one i did cost me £120 on £12000 and that was about amonth ago (plus interest on the £120 - to me that is very cheap money to have for 12 months!)

Each cc co has its own strange rules- some are a licence to print money - some are brick walls - I have been doing this for nearly 7 years and the rules are changing all the time - but the cc companies are basically trying to get you to take money - not be able to pay it back - then make their money in interest from you for some considerable amount of time at the end of the offer period

You must stay one step ahead and make sure you can pay it back when the time comes - or roll it onto another card ! (This is serious and should not be taken lightly - THIS MONEY IS NOT, UNDER ANY CIRCMSTANCES TO BE SPENT ON CARS HOLIDAYS OR CONSUMABLES OF ANY KIND ) It is the principle of guaranteed arbritage working at its best and is for investment purposes only.

If you do have to pay a 1.5% tx fee then this is not ideal but as long as that money is making more than it costs you then i will usually go with it !

You will also need to make sure at least one of the cards allows "a bal tx" to go to direct to your bank acc (to pay off your overdraft etc) you need to channel the other bal tx to somewhere where you can convert it to cash - MBNA EGG etc will allow this.

To illustrate: i had 25k at 0% on cc(12mth deal,no fees),i used it as dep on hmo prop in oct 03 (house cost 150k but was worth about 165k -see silly offers above) did some work on house -not a lot mainly cosmetic - but did get a contract for advertiser on the billborard that wasempty on the side of house and restore garage to usable condition)then in mar 06

because of the income from hmo/sign and now let garage also in 03 prop prices did jump massively - I took further borrowings secured against the prop of 60 k with which i bought another 3 props those 4 props are now worth in excess of £1million.(total time from speaking to cc co to owning those 4 was about 10 mths-Thanks again Mr Credit Card) Lucky ? yes -to a degree, due to massive house price increases in 03/04 but it can still done regardless as long as your figures stack up!

I have repeated this chain of events many times and it just gets easier each time - mainly because the "fear of the unknown is now not a factor for me" I hope this lot will remove some of the fear for anyone reading it !JUST DO IT !

Exactly the same priciple also applies with remortgaging/drawing equity (for the next dep) - it needs to be looked at regularly at morts moved when neccessary to keep the rate competitive - then as long as your figs on the proposed new prop are going to produce more than it is going to cost you in interest payments (Considering all aspects- voids int rate rises repairs resale val etc ) then why on earth wouldn't you but the next & next ........etc

Clearly this is not an in depth plan it should be used in conjnction with huge doses of common sense and experience as you begin to build a portfolio and ALWAYS CONSIDER WORST CASE SCENARIOS; if you havent got it covered; then WAIT until you have.

Please dont think i take huge risks - i dont. Every financial move i make is covered. I do not subscribe to the "businesses breaking even in 3-5 year theory " If it doesn't make money from day 1 i will RUN the other way!

Bit long winded, i know Russ , but a means to an end; even if nowadays we have to part with a few pennies to get what we need!

Michael - get some sleep !

Simon LOL

[russ295]

cheers simon.

have been toying with the idea of buying more property, currently have my home (215k) a maisonette (£95K) and three retail shops all let, no idea of value, pulls in about £900 per month, the only mortgage is on my home property and is currently at £98k, i am selling the maisonette at the minute as its very old and huge and takes a bit of looking after, but with the prices that the flats/small houses are up for and the rents they are getting its hard to make a decision whether to buy or not. i know there is the capital growth and i dont think the prices will drop as long as you pick the right type of property, so its dilema time for mr Russ.

ps, if i told you how much i paid for the maisonette and the three retail shops four years ago you would have a fit! it was in 5 figures and the first was a 1!

russ

[Simon Dewsberry]

Hi Russ

No finance issues there then!

If you do nothing you get nothing; if you invest you have a risk - and hopefully a return! If you invest carefully you should improve your lifestyle -overall wealth!

If you are financially independent, drive the car you want to drive, live in the house you want to live in , have the holidays.., slush fund ...,emergency fund...., and are "happy and content and have enough put away to give you that for the forseeable future - Don't bother buying anymore!

You are a long way ahead of me if this is the case !!!!!

If you sell the mason for 98K (minus cap gains !) what will you then do - put it in a high int acc? pay off your mortgage ?

You know exactly what i would do - but that is me !

Fact is there are 1000's of stunning prop deals out there - just look and you will find!

The other thing to consider if you want to reduce hassle factor and exposure time to market - DONT btl -buy improve and sell - buy off plan and sell - buy convert and sell- buy get planning and sell etc

Lots of other avenues other than long term btl with the day to day hassles that i'm sure you are only to aware of.

Personally i am looking to buy small 2 bed "tired" starter homes which can be gutted/refitted in 6-8 weeks -do them to a high standard - Jacuzzi baths,nice kitchen, tiled floors lanscaped gardens etc and then sell them even with the option of being fully furnished (as i'm in the trade!) then keeping a good portfolio of pics to sell the next house basically "before i buy it " This will avoid all the hmo regs, licences, TDS, tenant probs etc which are becoming a pain in the proverbials! If i can do 6- 10 a year at 10k -25k profit that is a nice string to any bow.

I have a fairly large portfolio which is as big as i can manage on my own - and i am not about to start using agents- so for me this is the next piece in the jigsaw -

Simon

[plym77]

sorry, dont have a whole lot of time as I am about to leave now for Easter hols, and will leave a full reply when I return, but thought I should mention that you CAN use your residential mortgage as the loan for a BTL and claim interest, in certain circumstances. I will post again on this subject when I get back after Easter

Regards

Sherena

[plym77]

OK, am back

Mortgage Interest - it doesnt matter that a mortgage is secured on your residential property, rather than a BTL for tax purposes - whether you can claim the interest relief will depend on the value of the property at first let. I have posted about this a couple of times, so for a fuller answer, please search mortgage interest on the forum.

However, in basic terms, if your BTL is introduced to your letting business at a certain value, it is that value on which you can claim mortgage interest, eg.

Buy a house for private use in 1990 - Value £100k

Decide to make it a BTL in 2000 - Value £150k at introduction to rental business.

If you have only a mortgage of £100k on the BTL, do you have a residential mortgage too? if so, interest on up to a further £50k may be available

Also note that the BTL will always for the top slice of your borrowings so if you are on a repayment mortgage - any non-qualifying borrowing will be what is paid off first, ie, in the example above, if your home mortgage is £200k, and is a repayment mortgage, then as it is repaid, you will be repaying the non-qualifying bit first, leaving the £150k claimable on BTL intact until both loans start to fall beneath this figure.

This is a complcated subject and is not as black and white as it may seem - individual circumstances should be considered

I hope this helps

Kind regards

Sherena

Individual cicumstances will decide on the specifics, but broadly people do not realise that further interest releif may be avaiable