Advice on my next move!

[Samdee]

Hi! I bought a flat in Cambridge just before the crash in 2009, when I moved it was negative equity so I agreed with my lender that I could rent it out. I bought another house to live in. It's now got about 70K equity. I'm thinking of selling it, buying somewhere that I can do holiday legs and use myself in the summer. I have a lot of questions, who can I go to to get advise on the best strategy? My accountant isn't great. Maybe you can help answer some questions too!
-if I lived in the flat myself for a while and rented out my house can I reduce capital gains tax?
-when I buy a new place is it worth doing through a limited company? What are the tax benefits?
- should I consider releasing equity rather than selling?
-would it be a second home mortgage rather than btl for holiday home?
I'm considering this because of the changes coming, I've got a massive mortgage and small net income, so if I can't offset it in the future, it won't be worth keeping. I'd rather have somewhere I can enjoy!
Thanks

 

[Nicholas Wallwork]

Wow lots of questions Samdee! I'll try to help given the info above..

- yes I believe you can, check with an accountant first abut how his effects CGT as its a complicated calculation based on time spent in each residence and what you elect as your PPR (principal private residence).

- Ltd co or not - not a short answer and depends on your own situation. With new legislation coming in next year to reduce the interest relief landlords can claim having a property bought in a Ltd co will mean it's not effected by this. But to counter this there is talk of increased dividend tax (ie getting cash out of your Ltd Co) so who know how these changes will work out. There is less CGT relief in a Co rather than in your personal name when you sell (as you can use various reliefs). Ltd Co gives more protection but has an annual cost to run and lending can be harder for less experienced landlords. Sorry it's not a conclusive answer but if you need a strategy book a session through my mentoring course launching soon and I will help you in detail figure out a strategy.

- if the LTV (loan to value) is low enough and you can release equity and still cover the mortgage with the rent and a buffer then equity release is the way to go in my opinion. Just make sure you have a cash flow buffer if / when interest rates increase...

- one would have to be a BTL mortgage really and a holiday home is a class of rental property if it's let out. If the lenders are happy then it's ok but be careful you don't breech your mortgage conditions...

I hope that helps a bit