JJJHM

Has anyone had advice on a second property.. we will be selling our principal home to raise some cash to take with us but have a mortgage free property with very long term tenants and unsure whether to sell or keep....

Has anyone been in a similar situation and what did you decide to do..

I know income tax could be an issue and capital gains tax.. also if we decide to keep it would it be better to take out a small mortgage on it or should we leave it mortgage free?

I know there are several people on this board who have a lot of financial knowledge, I'm not looking for free advice just some ideas....!!

odaat

Lots of choice - methinks that is the problem ....

IMO - narrow the choice based on "do the number's stack up" ?

i.e. what is the current rental yield based on capital invested?

Can mortgaged money be serviced from tenant rental ?

what are the fees / costs / maintenance charges for letting the property while overseas ?

Is there still capital gain increase on the property ?

Once you have answered the above - only two options left

Option #1 - keep:-
As lending rates are still cheap in the UK compared to Australia, up to 80% equity can be released from the investment property and the money banked / invested - meanwhile tenants continue to pay mortgage.

Option #2 - sell:-
If your credit remains good in UK - The "security" of maintaining a prop in UK is no longer a viable investment "vehicle" - prop prices are falling and it makes sense to sell as a going tenanted investment - buy back for higher profit at a later date - bank the cash in a high interest rate a/c in the meantime.

odaat

ABCDiamond

Would a "new" Mortgage on it still be tax deductible ? If it would be, (it would NOT be in Australia) then a mortgage may be worth it to reduce tax on the rent, and to avoid a larger personal mortgage in Australia that would NOT be tax deductible.

I think Tax advice for you on this, may be very valuable.

Jacko1

Hi,
We were in a similiar position and have a second (mortgage free) property in the UK. We decided to keep it for a couple of reasons. We, like you, have long term trouble free tenants who are more than happy with the arrangements and also, not pessimistic, but it gives you something to go back to if a couple of years down the line things are not working out.

So we sold our main residence and held on to number two.

You will need tax advice, best to go to a professional, or speak directly with the IR, they are very helpul these days if you can get hold of the right person.

Good Luck

Paul J