how can i release cash a property?

how can i release cash a property?

Didn't find your answer?

Hi, i wonder if someone could help. I'm not a professional accountant (or anything like) but thought this the best place to post a plea for help.

Briefly, we own two properties.

My husband's sole name is on one ' value £120,000, mortgage £37,000 (we rent this house out)

The other is in joint names and is our principle residence ' value £170,000, mortgage £80,000

At the moment we are asset rich (not too rich!)and cash poor ' how can we get at some of the money tied up in the properties? I don't really want to take a loan against the properties.

someone did suggest that i may be able to offset the interest against the rent for tax purposes

any suggestions/advice will be very much appreciated
Andrea Tobin

Replies (5)

Please login or register to join the discussion.

avatar
By stevec.cooperparry.com
06th Mar 2006 10:52

Email
Andrea, please email your phone number to me ([email protected]) and I will call you to discuss further.

Thanks (0)
avatar
By AnonymousUser
05th Mar 2006 18:19

Thanks - great advice, where do i go from here?
Thanks Steve for that advice. That would seem to solve alot of our problems.
How do i go about this? Is it best tp hire an accountant?
The property value when we first decided to rent was approx £60,000.
The only problem is what do we do with the existing mortgage? Would we have to remortgage as as interest only mortgage again?
At the moment our mortgage is with Abbey (not a buy to let)and the endowment is with Starndard Life - a very poor performing endowment (which we have already made a claim for being missold (which we received payout for).
We decided to keep the endowment going for the presnt time until Standard Life demutualised and we received a payment.
I believe we are tied to Abbey for a further 2 years on a discounted variable rate.
Would you recommend we continue with the Abey until the tie in is finished and then remortgage at the higher amount?

I know all of this is alot to ask, i appreciate any help. Perhaps there may be someone i could talk to?

thanks
Andrea

Thanks (0)
avatar
By stevec.cooperparry.com
02nd Mar 2006 19:03

An alternative view
I have clients in the same situation as you and have advised them to do the following.

Remortgage the rental property up to the value of the property when you first rented it out (usually the purchase price).

The cash you get from the remortgage can then be spent on anything you like (i.e. it doesn't have to be spent on the rental property) and you can now claim full tax relief on the interest.

This is as a result of a change in the tax rules about 10 years ago which weren't publicised very widely at the time!

If the original value of the rental property is only £37k and hence you have no scope to do the above, there is also a way for you to increase this 'original' value to £120k.

Steve
http://www.coatesfranklin.com

Thanks (0)
avatar
By User deleted
02nd Mar 2006 15:23

Options
You could raise your mortgages - but be careful regarding interest claimable for tax purposes. Any interest due on the increase in the loan on the rental property or your own home would not be allowable unless that money was used in the rental property (rennovating it or buying it in the first place).

Now if you didn't want to keep the rental property in particular you could sell it and get a full mortgage against another one - and all that loan interest would be allowable for tax as the full proceeds of the loan would be used in that property business. Of course the downside is that any capital gains tax payable on the increase in the value of the property would become payable, so if you decide on doing this work out if you should probably get property put in both your names (and therefore get two free capital gains tax bands so that no tax is payable on the first £17,000 of the profits) or transfer the property into the name of the spouse paying least tax (you would need to do a few calculations to work out which was best - but probably the former).

The only other obvious suggestion is equity release - but bear in mind that these schemes give a small fraction of what the house is worth and are therefore only really useful for elderly people who didn't want to leave their house to anyone in particular.

Thanks (0)
avatar
By AnonymousUser
02nd Mar 2006 15:55

Thanks for your detailed comment
Thanks rachel for your comment. It's not as easy as you think (getting at one's own money!)

Don't think that the equity release one is for us, but will consider the suggestion of increasing the loan on the rental property as we do need to update the heating system (and we need to get the money to do this from somewhere).

Thanks (0)