Inherited 3/4 of property in W. London

Discussion in 'London and the South East' started by Ratcliffe, Oct 11, 2018.

  1. Ratcliffe

    Ratcliffe New Member


    I've recently inherited 3/4 of a property in London from my late grandfather and was wondering what you'd do in this situation:

    My sister owns the other quarter of the property (wonder who's the favourite grandchild? :D) and she has no interest in keeping it. I want to buy it from her using basically the entirety of my savings account and let the property. It's nothing big or expensive, but it'll be a good investment I reckon, seeing as I already own most of it anyway. I've got one big question so far though, what happens with my income tax with having two incomes like that? If I paid the rent I'd get from it directly into my savings, how would it be taxed? I've had a go with this salary calculator but just can't get the numbers to work without having insane amounts of tax on it (I'm just about on the borderline for the 40% tax band). Are there any good sites for more info about this?

    Cheers! :)
    Last edited by a moderator: Oct 12, 2018
  2. Mrs D

    Mrs D . Banned

    You’d have to pay 40% tax on the rental income, yes.

    Imagine you were given the money that your share is worth instead. Would you really combine it with your life savings and buy this property? If not then you should probably consider selling it.
    moochedit likes this.
  3. dylanredefined

    dylanredefined Not a house elf a tiger

    [​IMG] Really the wrong place to ask for this sort of information tbh.
  4. Edie

    Edie Well-Known Member

    What would you suggest he does? Sell it and invest the money?
  5. not-bono-ever

    not-bono-ever Alles hat ein Ende nur eine Wurst hat zwei

    most landlords manage to pay fuck all tax- its not difficult
    moochedit likes this.
  6. Puddy_Tat

    Puddy_Tat hmm

    I'd agree that this is possibly not the best forum for advice on wealth management and / or being a landlord.

    Two little thoughts

    What are you going to do after that when the roof starts to leak / the boiler breaks down / any other unexpected thing like that and you haven't got any money in reserve?

    Landlords do have responsibilities towards tenants, in terms of keeping the place in order. Shelter has more here.

    This would be taxable income. You'd be in the realms of doing a tax return each year as it's outside the scope of having the tax knocked off by your employer. For any form of business you should pay tax on your profit not your gross income, though, so it would not be a case of paying whatever tax rate on the full rent. HMRC page on such things here.
  7. dylanredefined

    dylanredefined Not a house elf a tiger

    Fill it with young conservatives bar the doors and set fire to is the first thing that springs to mind.
    Never been a landlord only had crap ones selling it and investing is easier. As Puddy_Tat says if you rent it out what happens if the boiler goes? Though at least they would not be worried about making mortgage payments on it. Like BTL filth.
  8. eoin_k

    eoin_k Lawyer's fees, beetroot and music

    Rachman would have been a much better username for a first post by a potential west London landlord.
  9. Puddy_Tat

    Puddy_Tat hmm

    you may also need to consider

    a) whether there's an inheritance tax liability now

    b) whether there would be a capital gains tax liability should you sell the place at some point in the future

    my understanding of both is fairly fuzzy.
    dylanredefined likes this.
  10. Lazy Llama

    Lazy Llama Suburban robots that monitor reality

    Also need to consider this being spam for a salary calculator.

    ETA: It would be a terrible thing if someone changed where the link pointed - to another, different salary calculator for example.
    Last edited: Oct 12, 2018
  11. ska invita

    ska invita back on the other side

    not really, im sure if he hangs around just a little he'll get all his answers, advice about where best invest his profits in a stock portfolio and an invitation to the mason

    (but yeah its probably spam)
    dylanredefined likes this.
  12. moochedit

    moochedit Mr Mooched It

    IHT limit is £325,000 (or possibly £425,000 for a home to a grandchild it says here)

    Inheritance Tax

    Given this is London we are talking about he is probably over that.

    Tax when you sell your home

    says you don't pay capitol gains tax when selling if all these apply:
    • you have one home and you’ve lived in it as your main home for all the time you’ve owned it
    • you haven’t let part of it out - this doesn’t include having a single lodger
    • you haven’t used part of it for business only
    • the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
    • you didn’t buy it just to make a gain
    so yes he would have to pay it.
    Last edited: Oct 11, 2018
  13. moochedit

    moochedit Mr Mooched It

    Sell it and then donate it all to charity :p
  14. Edie

    Edie Well-Known Member

    Like you would :D
  15. dessiato

    dessiato Life is a lemon, and I want my money back

    You could sell it and buy Hobnobs.
    Puddy_Tat and moochedit like this.
  16. moochedit

    moochedit Mr Mooched It

    of course, wouldn't you? :D
  17. heinous seamus

    heinous seamus til clay-cauld death shall blind my ee

    Donate it to the local housing association :thumbs:
    moochedit likes this.
  18. Edie

    Edie Well-Known Member

    Oh yeah. Totally.
    moochedit likes this.
  19. nogojones

    nogojones Well-Known Member

    Green lodgers :hmm:
  20. ringo

    ringo Macaroni cheese controller

    The house will be valued at probate and inheritance tax paid, if due, at that point. Capital gains tax would only be liable should he then sell the house for a profit above the inheritance tax valuation. If it had gone up by less than the £12,000 annual allowance there would be no capital gains tax to pay. Anything over that would be taxed at 20%.
    moochedit likes this.

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