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Summer Let on IOW


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My Gran passed away at the end of last year and we are considering the possibility of doing up his house on the IOW and letting it out during the summer.

 

Just wondered if anyone else has done with a property and has any words of advice on the things to do, or the pitfalls to avoid? - especially with regard to setting things up and tax implications.

 

Appreciate any help

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Whereabouts on the Island is the house?

 

Mrs Stickman and I used to let out our terraced house in Cowes to yachtsmen during Cowes Week for about a grand, but I heard of others letting out larger properties for 3 or 4 grand. Mind you, that was back in the mid 80s when the Admiral’s Cup was still a big international event, but I think there’s still good money to be made from properties in and around Cowes during that week.

 

Can’t help you with tax and things like that I’m afraid.

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Property is in West Wight, about a mile and a half from the Needles (by foot). Been looking into this a bit and the tax bit is frightening - Capital Gains Tax and Inheritance Tax come into play I believe. Need a good accountant I think...

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In short, Inheritance tax is payable when you inherit (threshold £315k approx).

Income tax payable on your rental income (revenue less expenses) subject to your personal limit circumstances

Capital gains tax payable only when you sell it and it is chargeable on the gain only again subject to threshold

 

Thanks DA. Father has inherited property and intends to pass on to myself and sister (can do this within two years I beleive?). House needs work in order to make it suitable for let - we estimate between £50 - £80k.

 

Questions I have though..........

 

Do we need to set up as a business?

From this initial outlet, can we reduce/claim anything back against individual tax bills?

Neither of us are troubling the taxman with our current incomings; however, don't know if we can claw anything back (tax wise) on our outgoings whilst undertaking this work?

 

Not sure if this makes sense, but effectively we are hoping to reduce overall costs by claiming back tax on our expenditure whilst the work is being undertaken.

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Depends entirely on your personal circumstances and whether you and your sister's are the same.

I and my sisters considered holiday letting out my late mother's house, while she was in a home-(in perfect condition in a highly desirable and lettable position) but in the end decided that it involved a lot of work. Unless you really like the property you may be better to sell it and use the money for your own housing needs, or even use it for a deposit to buy an easily manageable buy to let, say a recently built apartment, that you can let easily.

I believe that your Dad can amend the will to pass on money as well as property.

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Property is in West Wight, about a mile and a half from the Needles (by foot).

 

Oh well, that rules out the Cowes Week market; nevertheless, the West Wight is a nice spot, with, I should imagine, plenty of letting potential. I assume you've checked out the number of similar letting properties in the area.

 

If you decide to go ahead with the project – and cut SWF members a good discount! – I might even let it myself.

 

Good luck with whatever you decide to do.

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My Gran passed away at the end of last year and we are considering the possibility of doing up his house on the IOW and letting it out during the summer.

 

Just wondered if anyone else has done with a property and has any words of advice on the things to do, or the pitfalls to avoid? - especially with regard to setting things up and tax implications.

 

Appreciate any help

 

Uh?

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I don't know what return you are expecting from this Holliday let. But when I tried to set up a buy to let I found that the best I could expect was about 6% return.

 

However, I could get 5.7 return on corporate bonds, and I invested in some share and have had 12% return or buy funds.

You can shelter the money in an ISA fund and share account making it tax free (you can put in 11,800 a year each) so as a couple you could shelter 47k by the end of April .

You can buy and sell shares and have the money in about 10 days. You can't liquidate a house that fast.

You will have responsibilities to let a safe property. During the winter you would need empty property insurance.

You would have all your equity invested in one property. If it got trashed or affected by a near by development you have no diversity.

If you bought 10 different shares or bonds you would be better protected from risk.

I find it a pain to drive to Calshot to repair our beach hut. Thats a darn site easier than getting a ferry, only to find you have the wrong tools.

You will find it takes much more of your personal time up then you imagined. Everything takes longer on the island.

 

In my humble opinion, do the house up if it costs in, but as a holiday let don't do it unless you are going to earn at least 15% return after all costs.

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