Selling your UK house to move to LOS?

[Lancashirelad 0]

DON'T!

 

I've noticed around the threads a few of you have been talking of ways to raise the dosh to move to LOS including selling up at home.

 

It's foolhardy. Keep that UK base..... at the very least for a good few years 'till you're absolutely sure you gonna stay.

Even a terraced house is worth around 25,000 bht/month to rent out. Lets qualify that: waitress, building site operative, etc. basic pay circa 3-4,000/month.

 

+ the UK house will continue to rise in value & rents will continue to rise.

 

So you have house rental income (remember to calculate in possible void periods)+ maybe UK state pension + maybe private pension + any other income sources you may have.

 

Its usually the one's who have burn't their bridges back home (whichever country), then found it actually costs a bit more to stay than they'd reckoned for, + maybe lost some to an ex TG partner, (especially likely if they were a bar girl) + some to a failed business deal. (would you buy a beer bar off a guy in a beer bar?) that try the midnight flying off the balcony thing we read about depressingly often.

 

Don't mean to dash your hopes & dreams lads, I'm just saying keep realism in view.

Edited November 19, 2005 by Lancashirelad

[BigRobo 0]

DON'T!

 

I've noticed around the threads a few of you have been talking of ways to raise the dosh to move to LOS including selling up at home.

 

It's foolhardy. Keep that UK base..... at the very least for a good few years 'till you're absolutely sure you gonna stay.

Even a terraced house is worth around 25,000 bht/month to rent out. Lets qualify that: waitress, building site operative, etc. basic pay circa 3-4,000/month.

 

+ the UK house will continue to rise in value & rents will continue to rise.

 

So you have house rental income (remember to calculate in possible void periods)+ maybe UK state pension + maybe private pension + any other income sources you may have.

 

Its usually the one's who have burn't their bridges back home (whichever country), then found it actually costs a bit more to stay than they'd reckoned for, + maybe lost some to an ex TG partner, (especially likely if they were a bar girl) + some to a failed business deal. (would you buy a beer bar off a guy in a beer bar?) that try the midnight flying off the balcony thing we read about depressingly often.

 

Don't mean to dash your hopes & dreams lads, I'm just saying keep realism in view.

You forgot the capital gains tax on rental income 40% soon maybe 75% if Gorden gets his way.

[Eneukman 1]

You forgot the capital gains tax on rental income 40% soon maybe 75% if Gorden gets his way.

You don't pay capital gains tax on rental income. You pay income tax at either 20% or 22% (can't remember which) though if you're UK income is above a certain figure then you will have to pay income tax at 40%. However, from the rental income you can deduct agents' fees, insurance, cost of running repairs etc and you are liable to income tax on the rental income AFTER these outlays.

 

As you are no longer resident in the UK, you will have to pay Capital Gains Tax when you eventually sell the house. This will be the difference between the sale price and the value when you left the UK, less certain costs.

 

I considered renting but decided that the hassle involved, agents' fees and so on were not worth it. Also, I reckoned that I could get a higher income by investing on the stock market, with hopefully a rise in the value of the shares over time.

 

Alan

[BongoBill9999 0]

This is something I am looking into at present and it is a bit of a minefield for the novice.

 

The taxable rate is 22% Alan.

 

You are broadly right about the CGT but the fact that you are abroad is largely irrelevant, I think. What counts is whether it is your main residence so it would apply to someone in the UK just renting out also. The CGT allowance is 8.5k pa and I presume this could be used to offset CGT if and when the house is sold. In my case it would hardly be relevant as I have no intention of selling and if I am pushing up daisies they can do what they want!

 

This is a good website for checking on the various allowances:

http://www.direct.gov.uk/MoneyTaxAndBenefi...4027&chk=Pxa9k4

 

As I said, it is a veritable minefield and well worth someone contemplating selling to seek professional advice.

 

Bill

[cottesloe 0]

Hi,

 

1. No CGT on the sale of your main residence.

 

2. Income tax on rental income after expenses.

 

3. Income tax or CGT on any investment of capital on the the proceeds, if any, of the sale.

 

4. Remember Income tax and CGT allowances.

 

I agree with BB on the posts initial concept ... Don't sell but rent - I would temper that by saying - at least for the 1st year. Renting property while abroad can be a real hassle - I did it for ten years and I'm now glad I did but there were quite a few moments along the way.

 

Cheers,

 

C.

[Niall 0]

No need to think about it just sell up. Rent yields are poor and agency charges high plus unless you are very lucky renting is a nightmare. Tenants smash the place up, steal stuff, run off without paying the rent. Unless you live within 5 miles of the property AND you know your tenants personally SELL.

 

Dump the money in a high yield stock like Lloyd's TSB. A much better return than the UK housing market plus your insulated against the coming UK property market collapse, and yes it is coming. The era of cheap money will end in roughly 2 years time.

 

And all I charge for this advice is a beer...

[marleyboy 140]

i think someone owes niall a beer!

[wagger 0]

wow! so many opinions... some informed some not.

 

As i understand it (and i am not a tax advisor) the issue of capital gains tax due on sale of the primary residence IS subject to your country of residency (country of residency in Tax terms another subject that needs qualification). After convincing the Tax office that you are no longer UK resident you have 3 years within which to dispose of your primary residence (unless you had to sell it to prove you are non resident) and not be liable to CGT. During this time you can be renting it out and claim income tax relief as mentioned by previous posters.

 

This seems like a good tax efficient strategy to me... and keeps your options open for a few years.

 

I plan to put the money into UK property funds after the sale so that theortetically i will always be able to buy back into the UK market whatever happens in future and avoids the hassle of rental administration.

 

If there is anyone here qualified to comment please correct my understanding if this is incorrect... it may effect my planning in a big way LOL!

[BongoBill9999 0]

As I said, it is a veritable minefield and well worth someone contemplating selling to seek professional advice.

 

Bill

I can only repeat what I wrote earlier.

 

Bill

[CheshireTom 1,377]

Some good financial advice and thanks for that but I would go along with Lancashirelad's opinion to ensure that you have a bolt-hole of some description that you can return to if things go tits-up.......... or at least the cash set-aside to allow you to return.

 

Tom

[valentinoxxx 4]

I agree with the not selling. I

 

A terraced house in my part of London yields around 180,000 baht per month in rental income.

 

I would only considering renting in Thailand, as I like the idea of being free to be wherever I want to be.

[Eneukman 1]

This is something I am looking into at present and it is a bit of a minefield for the novice.

 

The taxable rate is 22% Alan.

 

You are broadly right about the CGT but the fact that you are abroad is largely irrelevant, I think. What counts is whether it is your main residence so it would apply to someone in the UK just renting out also. The CGT allowance is 8.5k pa and I presume this could be used to offset CGT if and when the house is sold. In my case it would hardly be relevant as I have no intention of selling and if I am pushing up daisies they can do what they want!

 

This is a good website for checking on the various allowances:

http://www.direct.gov.uk/MoneyTaxAndBenefi...4027&chk=Pxa9k4

 

As I said, it is a veritable minefield and well worth someone contemplating selling to seek professional advice.

 

Bill

Thanks for clarifying the tax rate on rental income, Bill. I couldn't remember whether it was treated as earned income (22%) or as investment income (20%).

 

I have to go along with Niall as the net income I could have received by renting my flat in Edinburgh would have been a lot lower than I can get by investing in the stock market and a lot less than the 180,000 baht per month that Valentino can get.

 

One thing I did before moving out was take out a subscription to Investors Chronicle magazine. http://www.investorschronicle.co.uk/content/paid/home.html It cost something in the region of GBP120/140 and as well as receiving the magazine every week, I get access to the members' area of their web-site so I can keep an eye on share prices as well as read reports each company's results every half year.

 

Lloyds TSB shares currently offer a yield (after tax) of 7.2%. The latest report I saw on them in Investors Chronicle (August) suggested that the shares were at that time "High enough", which is a fairly strong indication that you should not be buying at that price. The shares I have bought will, if the dividends hold up, give me a net yield of 4.5%, though I can increase this slightly by selling some of my HBOS shares and buying some more shares in companies that offer a higher yield.

 

Whatever company you invest in, NEVER put all your funds into one individual company. Also, remember that share prices can go down as well as up and that dividends paid can be reduced as well as increased.

 

Finally, as always, be wary about taking investment advice from all the amateurs on this board, including myself.

 

Alan

[Lancashirelad 0]

I bought a broad spectrum of shares during 98 & 99. Some blue chip, some FTSE 100, some AIM.

 

A few have done very well. e.g. Mothercare (bought as Storehouse), Carnival Cruises (Bought as P & O).

Some have failed totally. e.g Monotub Industries (Titan washing machines).

MANY have dropped in value alarmingly. e.g. Psion & Knutsford (WIlink)

 

Money in: around £19k Value now £13k

 

Meanwhile the house is worth almost 3 times what it was valued at in 1998.

 

 

 

 

Does it really cost over £600/week to rent a terrace in London?

[rkt 0]

It costs £400.00 a week for a shit hole in Bolton!!

 

[valentinoxxx 4]

My area; http://www.findaproperty.com/agent.aspx?ag...8&photo=2#photo

 

North; http://www.findaproperty.com/agent.aspx?ag...prop&pid=319482

 

South; http://www.findaproperty.com/agent.aspx?ag...2&photo=5#photo

 

and in a less expensive area; http://www.findaproperty.com/agent.aspx?ag...=prop&pid=89638 ; http://www.findaproperty.com/agent.aspx?ag...prop&pid=189754

Edited November 21, 2005 by valentinoxxx

[BongoBill9999 0]

If I could get £400 a WEEK for my 3 bed bungalow I would be well chuffed!

[Eneukman 1]

I bought shares in 8 different companies when I got the sale proceeds of my flat last month and in the few weeks since then 7 have risen and 1 has gone down though only by 3p a share. I was particularly fortunate when I bought a batch of Alliance & Leicester shares at 822. They closed last week at 895.

 

The market as a whole has risen in this time, which has helped.

 

Now if only every share I bought would do as well

 

Alan

[enfield 0]

How much would you need to invest in a high interest account

to get a decent amount maybe eighty thousand baht a month

to live on already pissed off with London but only 44 probably 10 years

to soon for me to move to pattaya.

[Eneukman 1]

How much would you need to invest in a high interest account

to get a decent amount maybe eighty thousand baht a month

to live on already pissed off with London but only 44 probably 10 years

to soon for me to move to pattaya.

If you can get 4 1/2% after tax, you would need £305,000 (based on an exchange rate of 70 baht to the £). On a rate after tax of 4%, you would need £340,000. I have ignored personal tax allowances in arriving at these figures, as I'm too tired to do the necessary sums.

 

However, in reality you would need more than that to compensate for the fact that interest rates are likely to fall in the UK. In addition, you also need to factor in the effect of inflation as by leaving all your money in a bank account it isn't going to grow and the interest you get isn't going to increase unless interest rates start rising.

 

I've invested a substantial sum on the stock market and based on current share prices and predicted dividends, my yield (after tax) will be 4.5%. If share prices go up, the yield will fall but hopefully the dividend paid by companies will increase on average by at least the rate of inflation thus increasing my income year on year.

 

Alan

[cottesloe 0]

Hi,

 

As an add on to EMan's last post ...

 

It generally works a little like this. Interest rates are generally used to keep a cap on inflation. The base rate in the UK currently runs at around 1 - 2% greater than the inflation rate. So, you are only going to get at most 2% (taking into account ISAs, tax allowances etc) greater than the rate of inflation.

 

So, to stand still on your capital and get £14K a year, you need to invest an amount where 2% (at best!) gives you 14K and that amount is around £700K.

 

Now that doesn't include any thought of exchange rate fluctuations that can go for or against you, the dreaded stagflation :-) and of course how long will you live ... as it's no use being dead with all your capital intact :-).

 

My arithmetic is crap but but I think you need a lot more than 350K invested to get a consistent 80K baht a month.

 

Alan, Am I talking shite or is £700K a closer figure to invest to maintain 80K baht a month than the simply worked out one you suggested?

 

Cheers,

 

C.

[enfield 0]

What about selling up now clearing 150 grand have 15 good years 45-60

while your young enough to enjoy it?

[wacmedia 277]

What about selling up now clearing 150 grand have 15 good years 45-60

while your young enough to enjoy it?

 

Hi,

 

Decisions, decisions old boy.

[BigDUSA 71]

No need to think about it just sell up. Rent yields are poor and agency charges high plus unless you are very lucky renting is a nightmare. Tenants smash the place up, steal stuff, run off without paying the rent. Unless you live within 5 miles of the property AND you know your tenants personally SELL.

 

And all I charge for this advice is a beer...

I sold ours in the preparation for the move to LOS. Niall is 100% correct. If you don't live within 5 miles of your rental. You will get fucked.

[Emil 0]

I sold ours in the preparation for the move to LOS. Niall is 100% correct. If you don't live within 5 miles of your rental. You will get fucked.

Here you go again making generalized statements. I've had 2 rental, the first one I've rented since 1974 and its only been vacant 1 month. The other I began renting in 1993 and sold it last year and it was never vacant. Didn't have a property manager and both exceeded your 5 mile radius.

[Hub 203]

I sold ours in the preparation for the move to LOS. Niall is 100% correct. If you don't live within 5 miles of your rental. You will get fucked.

Have you rented a house out previously BigD?