G77

Let me get this straight - if you keep it for 5 years and then sell, you owe nothing in terms of UK CGT? How does that make any sense?

JB0591

Hi Adrian

Things not going to bad, not all to plan yet on the job front but something will come soon. I'll PM you soon and explain more.

Cheers

JB

JAJ

As far as I understand, the UK gives emigrants a "free pass" on CGT provided you stay outside the country for at least 5 years. Take a look at the HMRC website to confirm.

However, if you choose to settle in Canada, Canada assumes you sold and repurchased your assets on the day you become tax resident. The subsequent sale or disposal may create a capital gain in Canadian dollars. Or more likely, given UK house prices and the pound sterling over the last few years, a capital loss.

Alphawolf

Why am I being ridiculous????
If we sold it for less than we owe on it just to achieve a sale, that I would term giving it away!!!

Alphawolf

Thanks for that would greatly appreciate it

JAJ

From a reputable online dictionary:
http://www.merriam-webster.com/dictionary/gift

Definition of GIFT
1 : a notable capacity, talent, or endowment
2 : something voluntarily transferred by one person to another without compensation
3 : the act, right, or power of giving

skippy2107

We are currently renting out our property. It's on a standard mortgage.

I don't believe it's fraud. The banks use buy to let mortgages because they require a larger deposit in case the property remains empty, you can't afford to pay the mortgage, and they end up re-possessing it.

Good luck

JB0591

Is that a standard mortgage with a rental clause in the T&Cs?

PeterF

The mortgage provider must give written permission to enable you to rent it out. If you have not informed them then it could possibly be seen as fraud on their behalf.

We had that for 3 years after that Nationwide said we must pay the extra 1.5% as they say its additional risk.

JAJ

Fraud is a criminal offence - fortunately bankers do not arbitrate the criminal law. Only the courts can do that.

I have never heard of something like this being considered fraud (especially as it relates to an existing mortgage, not a new one) but of course I could be wrong.

However, a breach of mortgage conditions may give the lender the option of a number of civil remedies, including requesting immediate repayment of the loan. Read the mortgage conditions and consult a lawyer experienced in this area.

Cape Blue

I know plenty who have not told their lender they are letting and have had no problem - its a risk, but what are your alternatives?

To ensure you protect your money and the lenders money, make sure you have a landlords buildings insurance and not just your normal policy.

JAJ

Sell the house.

Cape Blue

Indeed, but if you crystallize a loss that you can't afford, continuing to rent (even without telling the lender) may be the most sensible choice.

Alphawolf

Exactly, thanks CB. JAJ doesn't seem to realise that in our case we are not particularly well off, we have saved every penny we can to make this emigration possible and we we're planning to use the small amount of equity we had approx $18000, for a deposit on a house in Canada.
If we were to sell it and get nothing out of the equity after living in it for 12 years, what's the point honestly??
The exchange rate and house price slump has made our future plans much harder than they should have been, simply selling at a loss or no profit is not an option we can take as we still have UK debt to pay off also after our move.

dbd33

It seems to me that the options are:

- rent it out, don't tell the lender and hope not to get caught. This gets messy because the lender needs an address for correspondence and, if that's not the house, they'll wonder what's up. You can't have the post forwarded forever and, anyway, that's not very reliable. If you use a foreign address they'll work it out exactly, if you use a friend or relative's address in the UK then that probably is fraud, besides which, they'll still know you're not living in the house.

- negotiate a mortgage that allows rental use. Make a loss on the rent, hope for a recovery in house prices to make it all worthwhile. The merit of this depends a bit on the likelihood of wanting to move back.

- sell, live with the loss.

- don't emigrate. Live in the house.

None of these, except perhaps the last one, look like great options but it's hard to see how, after twelve years of owning the thing, you have no equity in it. I'd have thought this more commonly to be the case for someone who's owned the house for a much shorter period.

None of this is "fair" of course and, to compound the problem, emigrating to Canada means giving up indexing of any state pension you might receive.