Move out of your home and let it out to tenants
We get this question sent in to us all the time.
Your children have grown up, at university, working or travelling. The family home is now too big to maintain or keep paying bills for.
So, what are your options?
A popular option is to sell the home and move into something more suitable, manageable… or moving closer to your children.
Assuming you’ve lived in the property whilst in your ownership, there is no tax to pay when you sell it… it’s all yours to keep!
Do be aware that if you have let out the property to someone else, you may be subject to pay some capital gains tax, so it is important to keep your records up to date and clear.
Move out… get tenants in… buy a more suitable place to live in
This is also a popular choice. We often see that homeowners have built up sentimental memories or want to look at an additional stream of income, buy renting out the home to tenants. Whilst this is possible you would need to discuss your specific requirements with your bank or an IFA (Independent Financial Advisor) for options available.
Whilst doing this could give you an income, you’d be required to complete a self-assessment tax return to declare the income and expenses generated each year.
Also, as mentioned above, if and when you decide to sell that home, you may be liable to capital gains tax. You might also want to think about whether there is any impact to your inheritance tax thresholds.
It is definitely worthwhile getting some good, sound advice to make sure you don’t upset HMRC and more often than not, there are simple, easy to implement solutions to help.
How does this affect me?
If you rent out your existing home and move into another, you must tell HMRC and declare the income within your self-assessment tax return.
Make sure your tax figures are accurate and you stay compliant with HMRC! Get started with us and we’ll make sure your tax return is done and filed with HMRC.