moving house

M

maggie mae

Guest
Hi,

I'm less than a year into paying a 100 pc mortgage and have two tenants under the rent a room scheme.

I've now gotten another job which is more secure but I will have to move so I was planning on renting my own room out and just renting another room out in the new area for the same amount which would mean my finances would be exactly the same as now. I wasn't going to try sell yet as I don't know exactly where I would like to live yet, plus I'd be liable for stamp duty as it's less then two years since I bought.

Would I be better off not renting out my room at all to stay under the rent a room scheme? I'm a state employee and will be doing the same job in another part of the country for the same money so I don't see why I should be liable for tax on the full amount of rent (as a landlord) tho income and outgoings are exactly the same? Obviously if there's nothing I can do about it, then so be it.

i woulkd be grateful for advice, thanks
 
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You might be in trouble here. If you rent out the house other than under the rent a room scheme within 2 years, then you are liable for the stamp duty clawback - it doesn't just apply to selling within 2 years. Also, you are only entitled to rent a room relief if it's actually your principal private residence and, if you move out to another place, it won't be....

In order to remain kosher and not have to pay back stamp duty, you will have to leave things as they are and maintain the house as your PPR. You may be able to stay in another place (for work) for X days of the week but I don't know if there's a bright line to measure that.

Sprite
 
If you are not genuinely an owner occupier then you cannot avail of the rent a room scheme. You can't arbitrarily "retain a room" etc. to fake it. If this property ceases to be your PPR and you continue to rent it out in part or full then you will be into a regular landlord/property investment situation. The implications of this for a former PPR are detailed in the Property Investment forum, FAQ, key posts and many existing queries about this sort of situation.
 
looka like i'm stuck where i am then, no way could i afford to pay the stamp duty now.
thanks for the replies!
 
i'll have to look through the threads you recommended. It's be the same job just the hope of a permanent contract that I',d be waiting years for where I am so have to take it really.
I suppose i could commute for the first year til the two yr clawback is up - slightly over an hour's drive!
I don't have any other loans except the mortgage which I find manageable and don't have any dependents so could b a lot worse I guess!
 
What about selling? And/or buying nearer the new job?

When considering renting the property out you need to consider all issues and implications - not just the SD clawback.
 
maggie mae said:
I suppose i could commute for the first year til the two yr clawback is up - slightly over an hour's drive!
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You appear to have misunderstood the responses - you can't avail of the rent a room scheme if you are not an owner occupier.
 
rmelly said:
You appear to have misunderstood the responses - you can't avail of the rent a room scheme if you are not an owner occupier.
Click to expand...

but... i think she means that if she waits until the 2 years are up then there will no stamp duty clawback if she then rents out the entire house... she will simply have to make a tax return every year declaring the rent that she receives and if she has a 100pc mortgage then she can most likely write off most (if not all) of the rental income v interest paid.

maggie - you better check this out with your bank though as they may not permit a 100pc mortgage on (what will become) an investment property.

from a quick glance you might be best to commute if it's only an hour - if your mortgage is 100pc then you might be facing some negative equity right now.
 
What a barrier to the free movement of labour Stamp Duty is.
I have heard this story many times, and it goes against what a forward thinking economy should be about.

Having an inflexible workforce is stupid in this day and age, and having to pay money to move jobs is even worse...

Simplify the tax system, or try and move to a property tax that is fair on everyone.
 
maggie mae said:
I suppose i could commute for the first year til the two yr clawback is up - slightly over an hour's drive!
I don't have any other loans except the mortgage which I find manageable and don't have any dependents so could b a lot worse I guess!
Click to expand...

Have you actually calculated how much the Stamp Duty clawback would be? Remember that it will be pro rated down by the number of years you have already been in the property.
 
thanks for the responses.

yes, I did understand the post about the rent a room scheme, I am availing of it at present and have two tenants in the house which is working out very well.

I have to say I do feel hard done by as I have no choice but to move to get job security, I cannot get it where I am due to poor management and red tape surrounding contracts (public sector). I didn't expect the opportunity to come up so soon, but I'm still on the same pay scale.
Obviously, rules are rules, but it does seem unfair that I can't just rent out my room and rent another room elsewhere for the same price.The figures are the same, I will be paying stamp duty on a second property when I do go to buy again.
I have educated myself to this point, pay anough tax yet I'm being penalised in the name of self improvement (sorry, letting off steam now!)
I don't think I need to worry about negative equity as the area is doing well economically - plenty of new employment recently, lots of demand for rental too.
anyway, i'll keep reading the threads, thanks very much, a great site
 
cancan said:
What a barrier to the free movement of labour Stamp Duty is.
Click to expand...
In this case the clawback is designed to prevent people claiming owner occupier benefits/reliefs only to make the property a rental/investment property soon after. "Soon after" used to be 5 years but was changed to 2 last budget. And to argue that the tax is a barrier to free movement of labour is a bit of a stretch!
 
maggie mae said:
thanks for the responses.

yes, I did understand the post about the rent a room scheme, I am availing of it at present and have two tenants in the house which is working out very well.

I have to say I do feel hard done by as I have no choice but to move to get job security, I cannot get it where I am due to poor management and red tape surrounding contracts (public sector). I didn't expect the opportunity to come up so soon, but I'm still on the same pay scale.
Obviously, rules are rules, but it does seem unfair that I can't just rent out my room and rent another room elsewhere for the same price.The figures are the same, I will be paying stamp duty on a second property when I do go to buy again.
I have educated myself to this point, pay anough tax yet I'm being penalised in the name of self improvement (sorry, letting off steam now!)
I don't think I need to worry about negative equity as the area is doing well economically - plenty of new employment recently, lots of demand for rental too.
anyway, i'll keep reading the threads, thanks very much, a great site
Click to expand...

How much a month are you getting currently from the 2 rent a roomers, including their contribution to bills etc?
 
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