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Join our Property forum for renovation, DIY, and house selling advice.

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Join our Property forum for renovation, DIY, and house selling advice.

Property/DIY

I have inheirited a house. Rent it out or sell it?

37 replies

oneofsuesylvesterscheerios · 14/10/2011 16:29

It's my dad's house; he died in June.

To begin with I couldnt bear the thought of parting with it. He had it built for him and my mum when they got married and we grew up in it.

However, I'm starting not to associate it with him so much anymore. There was a flood there last winter and lots of re-building has had to take place so it doesn't look like dad's house any more, iyswim.

It will be finished in the next month or so and I'm starting to see it as more of an investment rather than the sentimental thing it was. If I sell it, is that more sensible financially than renting it out and saving the rental? What would be a better investment for our dds: for us to sell it, pay off our mortgage and save for the future, or rent it out, invest the income and keep it for an investment the dds when they are older?

and what about tax?

OP posts:

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SolarPrestigeAGammon · 16/10/2011 02:44

Cowboylover - I'm concerned that you sound very naive about being a landlady. Have you actually worked out your return? Average in UK is about 2%. Your "rent guarantee" and "insurance" are worth diddily squat if you ever have to try and claim them so you are wasting money there.

I speak as an ex experienced landlady. I sold up in 2007. I'm getting more interest in the bank (even in these days).

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Gonzo33 · 16/10/2011 05:45

I am a LL I have been renting what was previously my home for the past 3 years and I have just started losing money on it with the repairs, so it is going up for sale in February. The agent I use are very good, but my Mum and Dad appear to be doing most of the running around and the emotional cost is becoming too much too.

OP I am a mortgage advisor by trade but am happy to chat about your options in relation to tax and such things, or point you in the direction of a good independant advisor if you don't have your own.

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gregssausageroll · 16/10/2011 08:39

If you sell it now the sale will fall part of the executry and will be your dad's PPR (own home) so no tax. If you rent and then sell you will be liable to CGT.

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An0therName · 16/10/2011 10:48

is the estate liable for inheritance tax - if not -and you havn't mentioned it so i assume not - if you sell now you and your brother won't have to pay anything

A relatitve have has a similar issue - jointly owned property- one didn't want to sell -and its rented out - its been quite tricky - they havn't made much money - and house prices have dropped quite a lot in the time - and its hard work - with maintance etc - and its caused a bit of difficulty in the family? - what does your brother want

re tax - the captial gains tax is worth consider - although there are lots of excemptions
but you will have to pay income tax on the rent - and a having been a landlord and am currently its no fun

Personally I would sell - pay off any debt/mortage and then decide what to do with increased income/lump sum for the DCs

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oneofsuesylvesterscheerios · 16/10/2011 11:07

Db is fine with whatever I decide.

I think I've been rather naive in my approach up to now. I have to admit I've been envisaging a retired couple or a young family living there as tenants, picking apples from the trees, sitting around the log burner and living it like we did .

Truth is it will be a PITA. and I need to make the break, I think. Once someone else is in it, it won't be our house anymore. Dad's gone and he was what made it our family home.

Thanks for the kind offer Gonzo33. I will pm you in next day or so if that's ok.

OP posts:

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MrsCog · 16/10/2011 11:19

If it was me, I'd sell it, pay off my mortgage and save the rest, then add what were my previous mortgage payments every month in to savings too - returns on savings are low at the moment, but this might change, you don't have any hassle, and you could then use your saved cash for other investments in the future if you really wanted. But then I'm a 'mortgage payer offer' even when I only have a spare £10 at the end of the month I log in and bung it off the mortgage - remember you pay back at least an extra £1 for every £1 you borrow if you pay your mortgage off over it's full term. So if you still owe £50K you'll actually pay back £100K.

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Lilymaid · 16/10/2011 11:29

oneofsuesylvesterscheerios
My father died earlier this year. We are now selling his house (the house that my DB and I grew up in). Renting wasn't really an option for us as we live quite a distance from the house and it needs updating work. However, we've noticed as we've cleared the house, our feelings towards it have changed. My parents are no longer there, it is an empty house now - we've kept lots of their possessions that remind us of them - and it is time to sell it on for a new family to make it their home.

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cowboylover · 16/10/2011 23:15

Thanks for your concern solar but mainly due location ect my returns are excellent. After all expenditure it needs to be tenanted for 8 months a year to make 12% but sounds like the tax implications for me are very different to OPs.

It's a scary (at times) minefield and every part of the uk is different so I recommend local advise OP and good luck. After a loss in the family it's the last think sometimes you want to think about.

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SolarPrestigeAGammon · 17/10/2011 05:49

Cowboylover - you are talking absolute bollocks. I imagine NOWHERE in the UK has a 12% return. You probably are not calculating things correctly.
How much is your property "worth" (NOT what it was bought for). What is your NET income (after tax, agency fees, "insurance"+"insurance", voids, maintenance etc). It certainly ain't 12%!

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cowboylover · 17/10/2011 09:20

Politely; I have done my numbers and so has my IPA so not bollocks. You do not know everything about every propery and everyone's tax implications so again thanks for your concern but not justified.
I am not a rookie here and my system is working very well for me But FYI I would clear £30k at best from the sale after all deductions and have £400 a month return again after deductions.

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Gonzo33 · 17/10/2011 12:28

oneofsuesylvesterscheerios not a problem

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EllaDee · 17/10/2011 12:37

I'm so sorry to hear about your dad.

My landlord is a little similar - they bought our place privately as the owner who died was a good friend and her inheritors wanted it to stay with friends. I have to say, they are very naive. Lovely people, but they had no idea how much work it is and I think they are getting absolutely fleeced by the lettings agents and by their own sense of guilt. But they also don't realize that tenants can and do expect problems to be sorted quickly - that's what we're paying for - so it's not really on to leave us with a cold shower for a month. DH and I are I think fairly easy-going but honestly, I think they will struggle if they get more pushy tenants after us.

Sorry, long ramble, but do be sure what you're getting into. If you choose a lettings agent, you'll still need to 'ok' certain things and you'll be paying them a fair whack. If you don't use a lettings agent, you will be on call 24/7, just as you would be in your own home, for anything that breaks. Anything like a burst pipe or broken boiler is considered an emergency, which you'll need to sort fast. I think it must be very hard work!

Personally, I think I would be too sentimental about a home to risk renting it out.