CAN YOU MOVE INTO A BUY TO LET PROPERTY

[rhomees]

HI ALL

WE HAVE A BUY TO LET PROPERTY BUT CANNOT RENT IT OUT AT PRESENT AS IT IS A LARGE PROPERTY, ARE WE ABLE TO MOVE IN AND RENT OUT OUR RESIDENTIAL PROPERTY INSTEAD, WHAT DO WE NEED TO BE AWARE OF ?

AS WE HAVE MORE INTEREST IN OUR CURRENT RESIDENTIAL PROPERTY THAN THE BUY TO LET

OR DO YOU THINK WE SHOULD RENT IT OUT ON A ROOM BASIS TO INDIVIDUALS AS WE HAVE 4 DOUBLE BEDROOM AND ENSUITE.

THANKS

NEW MEMBER

[tony_ mort]

DON'T shout.

Mortgage and insurance companies are the problems: insurance is the big one. If you have a policy on your residential property that covers letting then you are OK.

Residential mortage on residential property: don't tell them

Insurance on residential property: change to letting

BTL mortgage on BTL property: don't tell them

Insurance on BTL property: Tell them

If the mortgage company finds out: it's a hardship thing, and your best method of raising enough to pay them. (a post office redirection may be useful).

If you need to raise more cash then rent a room (but be careful if you have small children) may be good.

If you rent rooms in a BTL individually then you may find you are running an HMO.

[Simon Dewsberry]

Completely agree with Tony -BUT make sure your insurance is not with the same co as your lender as there maybe an overlap in the information if you change the policy !!

Simon

[plym77]

Hi

From a tax perspective, if you do move in to the BTL, then once you move in to the BTL as your home, elect the property as your Principal Private Residence (letter to HM Revenue and Customs). This will ensure that you receive the last three years of ownership as PPR exempt, reducing any future Capital Gains Tax on the sale of the property. If you sell within three years of purchase and have elected the property then you will not be subject to tax.

If you are continuing to use your main residence (as things stang at the moment) then I would suggest that you should consider whether varying the election back to your main residence is beneficial - remember that you can only every have one PPR, therefore if you elect the new BTL for say a moneth, then that same one month would become CGT'able on your main residence, however in reality, this one month would probably be covered by your CGT Annual Exemption (currently £9200), Taper Relief (rate depending on length of ownership - minimum ownership 3 years), and maybe even indexation allowance (if owned pre April 1998) and so would not be worth worrying about.

Also, if a property has been a PPR at some stage, and has also been rented out at some stage, then in addition to PPR exemptions, you will also be entitled to Lettings Relief - which can give further relief of up to £40k per owner at sale (the amount depends on a few factors).

Basically, think carefully about your elections, but do consider them as they can be very beneficial on the sale of properties.

Regards

Sherena Glanton CTA