Thinking out loud ... too early to downsize/prices dropping ?

[Inliverpool1]

So I have a 4/5 bed house bought when 4 DCs at home.
Now just me and preteen but I like the space. Don’t like the council tax and bills.
Am thinking of selling up. Moving to a more central area. Saving the difference into either my pension or shares.
BUT the capital gains on this house would be decent .... 20 years before I retire.
I could rent it out too
Going around and round in circles with it all tbh

If you were to rent it out do consider the extra Stamp duty on the new house and the CGT you'd have to pay if you ever did come to sell the current one.

QforCucumber - it literally wouldn’t be sold until I died if it was rented out

BUT the capital gains on this house would be decent .... 20 years before I retire

Why would you be paying CGT on your home if you sell it now and downsize? Or can you afford to buy a second home now while renting out your current one? Someone will have to pay CGT if you have a second home, also you will possibly need to pay higher stamp duty when you buy this second property.

No I mean the capital gains, not the capital gains tax.

So I would buy the smaller house with lower stamp duty and if I was renting out the bigger house once it was paid for I guess there would be ways to give it to the children without tax implications. We really aren’t talking millions here, not even close

You'd have to give it to your kids seven years before you die... or get dementia and need care

That is the plan. They’d have it well before then.

Renting out a property is hassle. You either pay for someone to manage it or deal with it yourself. Not to mention that within 20 years it would most likely be due a major refurb.

In your position, I’d just buy a smaller property and the then look into pension or other investments. With good planning, your children could inherit that tax free. Zero hassle in the meantime too. You just need good advice.

It is becoming more difficult to make money from renting out property OP. The standards that are expected now for rental properties are much higher than they used to be.
Some areas are bringing in licensing schemes for landlords where your property has to be inspected regularly and you have to pay an annual fee. For renting out a 4-5 bed house in most cities (am not sure if your username is a clue) you would need to be licensed to comply with this new legislation. There are big fines for landlords who don't comply.
As PP has also said there are also management fees if you use a letting agency and all the legal fees to set up the tenancy including credit checks etc are now paid by the landlord. There are also fees for gas safety and electrical safety certificates. There is also a minimum EPC standard that the property needs to reach for the property can be rented out (needs to be E or better).

I know what you’re saying I do like the idea of shares, shares do not cause worry in the same way.
So at 44 is a 3 bed cottage a bit giving up on life ? I’d have a tiny guest room, kiddo and I would be fine. Cats might be a bit pissed off but they’d get over it .... fabulous location shops and mini town on my door step

Tbh, that sounds more manageable.

You should hold shares within isas. You don’t want to keep shares as shares. I think you might need financial planning advice.

Renting out a house can be expensive and there is no guarantee it will rise and rise in price. It’s best to have a mixed portfolio. When you add to a pension it’s best to do if from earned income so you get tax relief. Again, you might need advice on what you are planning to do and how best to do it to get maximum tax advantage.

If you want to leave everything to DC without paying IHT, you will need to give everything over the personal allowance at least 7 years before you die. Also if you have two houses, your non main house will attract CGT when you sell which can take the gloss off profits.

I think having a house in a town with handy facilities is a good idea. Our house is large and in a small village with no facilities. I’m going to miss the space when we go. However I might not miss getting the car out to go everywhere!

How is a three bed cottage giving up? That’s more than a lot of people have ever and makes an awful lot more sense for two people.

A cottage is many people’s dream, why on earth would that be classed as giving up?

What happens when your older ones come home? Are they likely to boomerang?

Three double bedroom cottage with two reception rooms would give you privacy for when tween's friends come round and you'd have a guest room for your other dc. It's in no way giving up.