Retirement property thoughts
Posted: January 9th, 2017, 4:18 pm
I've been debating which board this should be posted under - it contains elements of property, Legal and Taxes, or even DAK? If the moderator thinks it should be moved, please do so.
I would be very interested in Lemonfools thoughts on the following:
My wife and I have four children, two grown up and left home, one about to go travelling for a year or so, and our younger son in a steady job and still living at home. We have lived in our house for over 30 years, with mortgage paid off some time ago, and we are both happily retired.
We both feel we'd like a fresh start and would like to move to the West Country. Our house is worth perhaps £350,000, and we also have around £300,000 in capital. I'm lucky enough to have a final salary index linked pension, enough for both our needs if we had nothing else, and in addition, state pensions are available to us this year for my wife, and next year for me. These will be around £6500pa for my wife and slightly less for me. My wife is not a tax payer, and I pay tax at the basic rate.
We've been looking at houses around the £450k mark. My initial thought was the my younger son living at home (we charge him a nominal £200 a month but in reality are saving this for him) would need to rent in the town where we live as he isn't keen to come with us. A room might be around £600 a month all found, which he could just about afford.
My second thought was that I didn't want to see that rent going to a money grabbing landlord (!) and that we could buy a two bed roomed flat for maybe just over £200k with the help of a ten year mortgage and then rent it to him for the £600 a month, with the other bedroom being a base for us when we revisited (we have grandchildren here). This would restrict the top level of houses we could afford if we saw one for a lot over £450k, but at least the rent would stay within the family - and I would be the money grabbing landlord! He could buy us out at some point if possible - we'd be a bit like Help to Buy.
Many apologies for the length of this post, but I thought the background was important. Questions:
- clearly there are tax implications here, for second home stamp duty and probably income tax for the rent we would charge him (£600). Can these be minimised/avoided by arranging things differently (my son could not afford the mortgage on his own but could we share the cost/ownership in some way?)
-what about the legal implications? Ownership/title deeds/mortgage
-would I get a mortgage of maybe £100,000 at age 64 this year - I'd think of putting £100k of our money into it and my son could put maybe £20k if needed, but if he did then clearly we'd need to share any capital appreciation. Or would it be better for it to be just in the name of my wife and I, or maybe just my wife as a non taxpayer - but she wouldn't get the mortgage. The idea would be to pay the mortgage back over ten years from the state pension income.
- or should we do things differently? Undoubtedly there will be things I haven't thought of. Your comments would be most welcome. Thank you in advance
Rob
I would be very interested in Lemonfools thoughts on the following:
My wife and I have four children, two grown up and left home, one about to go travelling for a year or so, and our younger son in a steady job and still living at home. We have lived in our house for over 30 years, with mortgage paid off some time ago, and we are both happily retired.
We both feel we'd like a fresh start and would like to move to the West Country. Our house is worth perhaps £350,000, and we also have around £300,000 in capital. I'm lucky enough to have a final salary index linked pension, enough for both our needs if we had nothing else, and in addition, state pensions are available to us this year for my wife, and next year for me. These will be around £6500pa for my wife and slightly less for me. My wife is not a tax payer, and I pay tax at the basic rate.
We've been looking at houses around the £450k mark. My initial thought was the my younger son living at home (we charge him a nominal £200 a month but in reality are saving this for him) would need to rent in the town where we live as he isn't keen to come with us. A room might be around £600 a month all found, which he could just about afford.
My second thought was that I didn't want to see that rent going to a money grabbing landlord (!) and that we could buy a two bed roomed flat for maybe just over £200k with the help of a ten year mortgage and then rent it to him for the £600 a month, with the other bedroom being a base for us when we revisited (we have grandchildren here). This would restrict the top level of houses we could afford if we saw one for a lot over £450k, but at least the rent would stay within the family - and I would be the money grabbing landlord! He could buy us out at some point if possible - we'd be a bit like Help to Buy.
Many apologies for the length of this post, but I thought the background was important. Questions:
- clearly there are tax implications here, for second home stamp duty and probably income tax for the rent we would charge him (£600). Can these be minimised/avoided by arranging things differently (my son could not afford the mortgage on his own but could we share the cost/ownership in some way?)
-what about the legal implications? Ownership/title deeds/mortgage
-would I get a mortgage of maybe £100,000 at age 64 this year - I'd think of putting £100k of our money into it and my son could put maybe £20k if needed, but if he did then clearly we'd need to share any capital appreciation. Or would it be better for it to be just in the name of my wife and I, or maybe just my wife as a non taxpayer - but she wouldn't get the mortgage. The idea would be to pay the mortgage back over ten years from the state pension income.
- or should we do things differently? Undoubtedly there will be things I haven't thought of. Your comments would be most welcome. Thank you in advance
Rob