Savings and Investments thread

Rob7Lee said:

red10 said:

Happy with our 3, we have assets under our control and are well aware of the bad tenant risks. Currently all is well fortunately but we have had an absolute shocker in the past. Brings in £25+k per year and it helps that we have no mortgage on them so if we need to sort anything out we have at least had the income. All investment comes with a risk imho.

would be interesting to compute the numbers v’s a Stocks and Shares ISA over the same period.

Especially on a net basis. 

Huskaris said:

mendonca said:

Are you thinking of BTL as an additional investment after using your £20k ISA allowance, or instead? 

It would be taking the cash out of ISAs and going down that route instead. 

In answer to @golfaddick's question, not really interested in an income, would probably just use the cash to buy more BTLs. I've watched lots of the bad tenant programmes!!!

The aim would be capital growth in the long term, I understand it's all illiquid, but illiquid assets should come with a premium as a consequence. 

And thanks @Rob7Lee I think you've probably all managed to talk me out of it. 

Probably one for consideration once all other tax efficient schemes have been rinsed through, and definitely not worth pulling cash out of an ISA to do this with. 

Annoyingly I've also seen that the entire rental income counts as contributing to your income, meaning I would step over into the dreaded 60% marginal tax bracket. 

I wouldn't rule out buy-to-let, as it diversifies your investments, but I wouldn't do it by taking money from my ISA.

Someone mentioned charging fair rent. Your tenants, if chosen well, will appreciate it. This is my experience anyway. But I agree one bad tenant could wipe out months of income. Ask for a good deposit that covers at least six weeks, ideally three months worth of rent, as it may take you that long to kick them out.

If you like DIY and know good trades people for stuff you can't do, it's a big advantage.

I wouldn't start with three houses, buy only one to test it out. I would buy somewhere I would like to live myself, rather than second guess what tenants would like, but that's just my preference.

Finally, at some point you could sell your main residence tax free, move to your rental property, note the capital appreciation at that point, and take the leverage from then on. 

Arthur_Trudgill said:

Huskaris said:

mendonca said:

Are you thinking of BTL as an additional investment after using your £20k ISA allowance, or instead? 

It would be taking the cash out of ISAs and going down that route instead. 

In answer to @golfaddick's question, not really interested in an income, would probably just use the cash to buy more BTLs. I've watched lots of the bad tenant programmes!!!

The aim would be capital growth in the long term, I understand it's all illiquid, but illiquid assets should come with a premium as a consequence. 

And thanks @Rob7Lee I think you've probably all managed to talk me out of it. 

Probably one for consideration once all other tax efficient schemes have been rinsed through, and definitely not worth pulling cash out of an ISA to do this with. 

Annoyingly I've also seen that the entire rental income counts as contributing to your income, meaning I would step over into the dreaded 60% marginal tax bracket. 

I wouldn't rule out buy-to-let, as it diversifies your investments, but I wouldn't do it by taking money from my ISA.

Someone mentioned charging fair rent. Your tenants, if chosen well, will appreciate it. This is my experience anyway. But I agree one bad tenant could wipe out months of income. Ask for a good deposit that covers at least six weeks, ideally three months worth of rent, as it may take you that long to kick them out.

If you like DIY and know good trades people for stuff you can't do, it's a big advantage.

I wouldn't start with three houses, buy only one to test it out. I would buy somewhere I would like to live myself, rather than second guess what tenants would like, but that's just my preference.

Finally, at some point you could sell your main residence tax free, move to your rental property, note the capital appreciation at that point, and take the leverage from then on. 

I hope you're not a landlord as your "advice" breaches a couple of laws for starters.

You cant take 3 months rent upfront as a deposit - I think the max is 5 or 6 weeks. And it then has to go into a recognised Deposit Scheme which is controlled when & how it is returned to the tenant upon leaving. And you cant "kick them out" - you have to apply for a Section 21 if they dont leave when asked & that might take 6 months before it goes before the Court. The only legal way a tenant has to move out is by a baliff. 

And you cant move into your rental property & start the Residential Nil Rate band from that point. Upon selling a property that has been rented out a calculation is made based on the number of months it has been rented to the number of months you've lived there, minus the last 9 months. 

red10 said:

@Arthur_Trudgill, it might have been me you have referred to in the aspect of charging a fair rent. Times change and some point the rents will have to go up but we do our best to be fair and decent and fix what we need to. We didn't start out with 3 properties, it sort of happened over the last 15 or so years when investment income was very hard to find and bricks and mortar was a bit more attractive.

My clients have never found Investment income hard to find..........

- Tax free income from their ISA's. 

- Tax efficient drawdown from their pension

- 5% deferred tax from an Investment Bond &  tax free if they are not higher rate taxpayers. 

Arthur_Trudgill said:

golfaddick said:

Arthur_Trudgill said:

Huskaris said:

mendonca said:

Are you thinking of BTL as an additional investment after using your £20k ISA allowance, or instead? 

It would be taking the cash out of ISAs and going down that route instead. 

In answer to @golfaddick's question, not really interested in an income, would probably just use the cash to buy more BTLs. I've watched lots of the bad tenant programmes!!!

The aim would be capital growth in the long term, I understand it's all illiquid, but illiquid assets should come with a premium as a consequence. 

And thanks @Rob7Lee I think you've probably all managed to talk me out of it. 

Probably one for consideration once all other tax efficient schemes have been rinsed through, and definitely not worth pulling cash out of an ISA to do this with. 

Annoyingly I've also seen that the entire rental income counts as contributing to your income, meaning I would step over into the dreaded 60% marginal tax bracket. 

I wouldn't rule out buy-to-let, as it diversifies your investments, but I wouldn't do it by taking money from my ISA.

Someone mentioned charging fair rent. Your tenants, if chosen well, will appreciate it. This is my experience anyway. But I agree one bad tenant could wipe out months of income. Ask for a good deposit that covers at least six weeks, ideally three months worth of rent, as it may take you that long to kick them out.

If you like DIY and know good trades people for stuff you can't do, it's a big advantage.

I wouldn't start with three houses, buy only one to test it out. I would buy somewhere I would like to live myself, rather than second guess what tenants would like, but that's just my preference.

Finally, at some point you could sell your main residence tax free, move to your rental property, note the capital appreciation at that point, and take the leverage from then on. 

I hope you're not a landlord as your "advice" breaches a couple of laws for starters.

You cant take 3 months rent upfront as a deposit - I think the max is 5 or 6 weeks. And it then has to go into a recognised Deposit Scheme which is controlled when & how it is returned to the tenant upon leaving. And you cant "kick them out" - you have to apply for a Section 21 if they dont leave when asked & that might take 6 months before it goes before the Court. The only legal way a tenant has to move out is by a baliff. 

And you cant move into your rental property & start the Residential Nil Rate band from that point. Upon selling a property that has been rented out a calculation is made based on the number of months it has been rented to the number of months you've lived there, minus the last 9 months. 

Yeap, 5/6 weeks deposit is the maximum, so ignore the 3 months. And kicking out a tenant was a manner of speaking; call it "apply for a Section 21" if it makes the argument clearer, which was that the deposit is unlikely to cover the loses from non-paying tenants.

Regarding moving into your rental property, the calculation you mention can still be profitable, specially if you live in the property for a few years.

Section 21 is likely to be removed in its current guise sometime in 2025. You then have the added EPC C regulations coming in by 2030. It's likely the latter means we will start selling ours off as we approach that date.

Arthur_Trudgill said:

Rob7Lee said:

Arthur_Trudgill said:

golfaddick said:

Arthur_Trudgill said:

Huskaris said:

mendonca said:

Are you thinking of BTL as an additional investment after using your £20k ISA allowance, or instead? 

It would be taking the cash out of ISAs and going down that route instead. 

In answer to @golfaddick's question, not really interested in an income, would probably just use the cash to buy more BTLs. I've watched lots of the bad tenant programmes!!!

The aim would be capital growth in the long term, I understand it's all illiquid, but illiquid assets should come with a premium as a consequence. 

And thanks @Rob7Lee I think you've probably all managed to talk me out of it. 

Probably one for consideration once all other tax efficient schemes have been rinsed through, and definitely not worth pulling cash out of an ISA to do this with. 

Annoyingly I've also seen that the entire rental income counts as contributing to your income, meaning I would step over into the dreaded 60% marginal tax bracket. 

I wouldn't rule out buy-to-let, as it diversifies your investments, but I wouldn't do it by taking money from my ISA.

Someone mentioned charging fair rent. Your tenants, if chosen well, will appreciate it. This is my experience anyway. But I agree one bad tenant could wipe out months of income. Ask for a good deposit that covers at least six weeks, ideally three months worth of rent, as it may take you that long to kick them out.

If you like DIY and know good trades people for stuff you can't do, it's a big advantage.

I wouldn't start with three houses, buy only one to test it out. I would buy somewhere I would like to live myself, rather than second guess what tenants would like, but that's just my preference.

Finally, at some point you could sell your main residence tax free, move to your rental property, note the capital appreciation at that point, and take the leverage from then on. 

I hope you're not a landlord as your "advice" breaches a couple of laws for starters.

You cant take 3 months rent upfront as a deposit - I think the max is 5 or 6 weeks. And it then has to go into a recognised Deposit Scheme which is controlled when & how it is returned to the tenant upon leaving. And you cant "kick them out" - you have to apply for a Section 21 if they dont leave when asked & that might take 6 months before it goes before the Court. The only legal way a tenant has to move out is by a baliff. 

And you cant move into your rental property & start the Residential Nil Rate band from that point. Upon selling a property that has been rented out a calculation is made based on the number of months it has been rented to the number of months you've lived there, minus the last 9 months. 

Yeap, 5/6 weeks deposit is the maximum, so ignore the 3 months. And kicking out a tenant was a manner of speaking; call it "apply for a Section 21" if it makes the argument clearer, which was that the deposit is unlikely to cover the loses from non-paying tenants.

Regarding moving into your rental property, the calculation you mention can still be profitable, specially if you live in the property for a few years.

Section 21 is likely to be removed in its current guise sometime in 2025. You then have the added EPC C regulations coming in by 2030. It's likely the latter means we will start selling ours off as we approach that date.

My plan would be to move to my rental property by 2030, and maybe even retire there.

Hopefully getting your tenants out will be hassle free!!

Sorry if has been mentioned already...

Vanguard have changed their UK ISA and pension fees. Lot of negative headlines and people seem to be quite unhappy that a firm who pride themselves on low fees have hiked them. Appears to be most impacting on smaller investors.

This article quite nicely outlines the impact

https://www.investorschronicle.co.uk/content/9f365526-890e-596c-8316-321754dbd441

what would you consider reasonable in terms of an estate being paid to recipients and concluded probate long since arranged and initial payments commenced in August of 2019.

there is as I understand a remaining tranche of shares to be sold in bank of Ireland priced in euros which the solicitor is struggling with.

The solicitors are unable to provide a time line for a full conclusion and it seems neither the executor - I suspect the hurdle is any tax which might arise in Ireland as estate tax is payable by the recipients of an estate and here it’s payable on the estate and the shares have already formed part of the probate total 

golfaddick said:

Jon_CAFC_ said:

what would you consider reasonable in terms of an estate being paid to recipients and concluded probate long since arranged and initial payments commenced in August of 2019.

there is as I understand a remaining tranche of shares to be sold in bank of Ireland priced in euros which the solicitor is struggling with.

The solicitors are unable to provide a time line for a full conclusion and it seems neither the executor - I suspect the hurdle is any tax which might arise in Ireland as estate tax is payable by the recipients of an estate and here it’s payable on the estate and the shares have already formed part of the probate total 

Sorry, can you be clear. Is the Estate subject to UK or Ireland tax laws ?

In any case Estate proceeds need to be distributed in a timely fashion. I have a figure of 2 years on my mind but I'm not sure if that is right. In any case the shares should have been sold as soon as & the tax dealt with at the time. No reason why they shouldn't have been as it's not like they are obscure or hard to sell. 

Shares are valved at the price on the day of death, probate granted in the UK, will not be acceptable in the Republic.

golfaddick said:

Arthur_Trudgill said:

Huskaris said:

mendonca said:

Are you thinking of BTL as an additional investment after using your £20k ISA allowance, or instead? 

It would be taking the cash out of ISAs and going down that route instead. 

In answer to @golfaddick's question, not really interested in an income, would probably just use the cash to buy more BTLs. I've watched lots of the bad tenant programmes!!!

The aim would be capital growth in the long term, I understand it's all illiquid, but illiquid assets should come with a premium as a consequence. 

And thanks @Rob7Lee I think you've probably all managed to talk me out of it. 

Probably one for consideration once all other tax efficient schemes have been rinsed through, and definitely not worth pulling cash out of an ISA to do this with. 

Annoyingly I've also seen that the entire rental income counts as contributing to your income, meaning I would step over into the dreaded 60% marginal tax bracket. 

I wouldn't rule out buy-to-let, as it diversifies your investments, but I wouldn't do it by taking money from my ISA.

Someone mentioned charging fair rent. Your tenants, if chosen well, will appreciate it. This is my experience anyway. But I agree one bad tenant could wipe out months of income. Ask for a good deposit that covers at least six weeks, ideally three months worth of rent, as it may take you that long to kick them out.

If you like DIY and know good trades people for stuff you can't do, it's a big advantage.

I wouldn't start with three houses, buy only one to test it out. I would buy somewhere I would like to live myself, rather than second guess what tenants would like, but that's just my preference.

Finally, at some point you could sell your main residence tax free, move to your rental property, note the capital appreciation at that point, and take the leverage from then on. 

I hope you're not a landlord as your "advice" breaches a couple of laws for starters.

You cant take 3 months rent upfront as a deposit - I think the max is 5 or 6 weeks. And it then has to go into a recognised Deposit Scheme which is controlled when & how it is returned to the tenant upon leaving. And you cant "kick them out" - you have to apply for a Section 21 if they dont leave when asked & that might take 6 months before it goes before the Court. The only legal way a tenant has to move out is by a baliff. 

And you cant move into your rental property & start the Residential Nil Rate band from that point. Upon selling a property that has been rented out a calculation is made based on the number of months it has been rented to the number of months you've lived there, minus the last 9 months. 

Relative lived in uk, but Irish roots and his investments included share holdings in bank of Ireland priced in euros. But UK for tax purposes.

Rob - solicitors keep saying it’s a complex case and to wait - distributions have been in dribs and drabs over the five years to myself and two other recipients- have never been able to get clear picture of what’s left to distribute or a realistic timeline to conclude 

since of course August 2019 when distributions there’s been numerous market impacts potentially impacting share price - although seemingly learned from here that share prices would have been value as at date of probate 

Unsure where to go next - executor isn’t approachable, solicitors seem indifferent, had perhaps thought would all been done and dusted by now 

Mendonca In Asdas said:

Anyone been tempted to take 25% tax free from their SIPP since announcements in the budget? 

I haven’t as yet, but that was actually one thing that didn’t get changed (the 25% or the capped amount) as some pre-budget stories suggested. 

Mendonca In Asdas said:

TelMc32 said:

Mendonca In Asdas said:

Anyone been tempted to take 25% tax free from their SIPP since announcements in the budget? 

I haven’t as yet, but that was actually one thing that didn’t get changed (the 25% or the capped amount) as some pre-budget stories suggested. 

I’ve arranged with my SIPP admin that I receive two incomes, drip feeding my 25% in monthly, so that I minimise my tax and stay below the top tax band. 

I guess the concern was that the government might take away the 25% tax free bit in the future.

Can you take the 25% in parts, ie 5% per year for the next 5 years etc?

You can. We just crystallise my income each month so that it is split. That tax free element, together with your usual allowance of £12,570 means I keep my income within the basic rate bracket. 

Covered End said:

Mendonca In Asdas said:

Anyone been tempted to take 25% tax free from their SIPP since announcements in the budget? 

Yes, I did last month.

I’d add @Mendonca In Asdas that, since the budget, I would now be taking from my pension pot if I have any projects (kitchen, garden) that need funding. I’d probably have used non-pension savings previously.