If you are mortgage free...

[DarthVader]

how did you achieve this?

i haven't really thought about it, SP, because it's like looking at properties or following house prices to me: it's something that may as well be going on in another galaxy for us.

well, the fact that it's in another galaxy for anyone is what makes me think it's immoral. if we all had to worry about it (and I might - you never know), I might think differently.

true enough, SP.

i'm still digging for the article. i think it was an Edinburgh Evening News one from last week, but i can't remember the title. i think it had the words 'widow' and 're-marry' in it.

Well we haven't paid ours off. But I think a lot of people on here are different ages and had property for different lengths of time. We still have 15 years to go but will, if we stay on track, have paid it off before we are 50.

dammit, i can't find this damn article!

it's now a mission.

yes but the money you save on interest is complete peanuts compared to the capital appreciation you would have got on a more valuable property, using those "shavings" to finance it.

but I can see I'm preaching to the converted, and the unconverted still think that I'm talking bolleaux. But then again I was always good at maths

oh and who cares about inheritance tax because you are dead

and you can give your house (or in fact any property) to your children (or anyone else) to get taper relief on IHT (if you live 7 years after the gift it goes down to 0%) but you intend to still live in it, to avoid it being a gift with a reservation you need to pay a market rent to the owners (ie your kids or whoever)

But as you can make it a full repairing lease, (ie the tenant is responsible for all the costs of maintenance) and if the house is, for example, a 300 yr old stately home with a bad roof, a full market rent is about 2.5p per annum (well obviously I exaggerate) since no one in their right minds would take on a full repairing lease of such a drafty old falling down pile.

As it were.

My MIL pays her rent to her children in the form of handing them a painting or a bit of silver once a year. WHich is always worth considerably more than the paltry rent she is meant to be paying.

Just for info, like

I am good at maths too - so I am going to take the risk of naysaying you.

I agree with you about gearing up, but not about gearing up on property you live in. Financial sense would be to pay off your own mortgage then gear up massively on buy-to-let properties. That way your interest payments get relief from tax.

Only if you can afford the repayments during void periods though, and taking the risk that property values will not fall in the longer term.

Also, I think the stuff about gifts with reservation of benefit is true but I think if you make a trust at the same time as the gift, am pretty sure the planning still works. Don't rely on this though and do get it checked out because personal tax is not my field.

yes quattro, but there ARE no void periods if you invest in your OWN property

AND you get to live in a much nicer house which surely is the point?

and not everyone wants to manage rental properties

but if they do, then buy-to-let away. My main point was that anyone who has bveen mortgage free for the last 10 years is a financial moron
which clearly you agree with

no it doesn't quattro
it has tightened up significantly in the last 18 months or so
What I typed is the current situation

if anyone has a stately pile and would LIKE to know the full monty then phone your Historic Houses Association helpline (you all have the number) and they will be most helpful

It always amazes me the number of people who live entirely debt free during their prime earning years? Gearing to 60-75% of property value, using drawdown capital to fund further borrowing is entirely sensible. Plus you can buy things like garages in central city locations in children's names, instead of faffing around with child trust funds.

Quattro - Your main residence is capital gains tax free because of principal private residence relief. The capital gain on a buy to let property is charged on disposal at the tax payer's marginal rate..... 40% for some people. So surely better to invest in your own home and down size once you are a lower rate tax payer - cash the gain in so to speak.

if i bought a lock up i'd have to live in it.

but it'd be a fun place to hang out .

Between:

(a) two people with their annual exemption, and

(b) living in it for a week prior to disposal and thereby earning three years' relief

you can mitigate gains substantially. Also these are longterm investments. Borrow now, buy now and sell in your dotage. If, that is, you are a lower rate tax payer in your dotage.

I think, anyway.

yes but quattro (b) is tax evasion stretching the intent of the tax legislation to the point of no return
and some of us like to be legal and above board in everything we do. as do you, obviously

now why didn't my witty and amusing striking out work?

oh, I see
tax evasion

is that better?

I think that (b) is avoidance - so perfectly within the letter of the law. Evasion is, I believe illegal. So is some avoidance too, but not that. Not that I'd do it, just pointing out that it exists.

Gearing up excessively on your own home does smack a little bit of having all the eggs in one basket though. Fair enough if you choose where you live purely for its potential capital appreciation, but unless you move fairly regularly to bank some equity you face the risk of living somewhere for 15+ years and suddenly finding that your back garden will border the proposed Heathrow Terminal 7 in 2045.

One of my friends is being pressured to move by her dh in order to accumulate as you describe. Apart from the fact that I think that they've left it too late for the current cycle, they currently live in the same road as her parents who pick up her children from school, take them home, play and do homework, feed them, then prepare a meal for my friend and her husband to be collected along with children when said friend finishes work. The dh wants to move to an area which would effectively rule out this arrangement. You can tell that he has never had to arrange childcare before can't you!

Oh x-post, sorry

Living in it for a week prior to disposal - lol. It is possible to vary your PPR (by election) when you have a combination of property but it must be available to you as a residence. I think they might smell a rat if you return income on a rental property then elect it as your PPR for a week prior to disposal . That is tax evasion.

of course evasion is illegal!
living in something for a week and then claiming it as your primary residence isn't avoidance, it is evasion. it is clearly not your primary residence, never was, and was never intended to be.
hang on, aren't you a tax lawyer? why am I telling you this?

she's definitely left it too late ladymuck