Renting First Property and Buying a Second

M

MichaelH

Guest
Hi,
I have an apartment and I am thinking of renting it to the local county council. They offer market rate for 12 months of the year. The rent will just about cover the mortgage repayments. I also want to buy a second place in the new year, is this a good idea and what are the implications of stamp duty etc? All advice appreciated.
 
When did you originally buy the apt and at what price? Were you a first time buyer when you bought the apt?
 
I bought the aparment in 2005 for c.320k and I was a first time buyer. I'm buying the new place with my girlfriend and she is a first time buyer. what do you think? Also will I get hit for stamp on the apartment if I move?
 
There are various potential implications of this ceasing to be your PPR and being rented out which are covered in more detail in lots of existing threads. In summary here are a few:
  • Loss of qualification for owner occupier mortgage interest tax relief
  • Clawback of stamp duty (i.e. liability for investor SD on the original purchase) where a former PPR is rented out within 5 years of purchase
  • Possible liability for CGT on some portion of any eventual resale gain unless you sell the property within 12 months of vacating it as your PPR.
  • Requirement to register with PRTB (unless renting to council is exempt?)
  • Normal landlord assessment for tax on rental income (see Property Investment FAQ)
  • Lender may need to be informed
  • Owner occupier home insurance probably no longer sufficient
  • etc.
Note that when buying jointly with your partner you will jointly be considered non FTBs for SD purposes although you can both claim FTB mortgage interest relief (you for the remaining 5 years of your 7 year FTB period and her for her full 7 years).

You should get independent, professional advice for your specific situation.
 
Thanks for the detailed response clubman. Very informative
 
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