How do you sort out letting your house?

[d000hg]

We have a house we let out (not really through choice) and it's simply done personally by me since I own the house... rental income feeds into SATR, etc.

I've heard some people wrap a business around this but I wondered if that's realistic and what differences it makes. I imagine a fair few here must rent out property - got any tips?

[Waldorf]

I just handed it all over to an agent, they charged 8% of the rent and for that they found the tenant, did the legal checks, collected the rent, sorted out any repairs etc.

Quite a good deal really and no hassle from tenants.

I think if you moved the property to you company you would need to legally move it and pay stamp duty and legal costs etc, so probably not a good move.

Just done a search on my accountants website and thought this may be of use?
http://www.nixonwilliams.com/images/...ngTaxation.pdf

[Greg@CapitalCity]

On the assumption you already run your own ltd company, usually assessing the impact of capital gains will help you decide whether its best to own the property yourself, or run it through a ltd company. Since you already own the house personally, you will probably find it makes more sense to keep the current arrangement.

A ltd company has no access to any form of capital gains exempt amount (£10,600 this year for an individual), and no access to private residence relief (PRR). So if/when you come to sell your house, a company would pay corporation tax on the gain at the prevailing CT rate.

If you owned the property personally, and so long as it qualified at some point as your personal residence, then;
(1) You pay no capital gains tax on the gain that accrued for the period you lived there;
(2) You pay no capital gains tax on the gain that accrued in the last three years of ownership;
(3) If a property which qualified for PRR is later let, letting relief may be claimed to offset the capital gain attributable to the letting period.
Relief is given on the lower of: (a) the gain that relates to the period of letting, (b) the gain subject to PRR, and (c) £40,000;

In light of that, personal ownership will probably work best for you.

[MarillionFan]

We have a house we let out (not really through choice) and it's simply done personally by me since I own the house... rental income feeds into SATR, etc.

I've heard some people wrap a business around this but I wondered if that's realistic and what differences it makes. I imagine a fair few here must rent out property - got any tips?

I hope you've informed the mortgage company and insurance that you're now acting as a landlord and renting out. Also I hope your declaring that for tax purposes.

[d000hg]

I just handed it all over to an agent, they charged 8% of the rent

Similar here but that's how the money is brought in, not who it is paid too

I hope you've informed the mortgage company and insurance that you're now acting as a landlord and renting out. Also I hope your declaring that for tax purposes.

Well obviously. Also insurance that allows letting to benefits claimants (not that easy to find). It's the filling in of my SATR that reminded me I wanted to look into the best option.

As for CGT I don't think the property has appreciated in any meaningful way. I did wonder, if the worst came to the worst, if having it owned through the Ltd would protect me in case we ever ended up defaulting - can't be too careful - but I would imagine the answer is no!

[MarillionFan]

Similar here but that's how the money is brought in, not who it is paid too

Well obviously. Also insurance that allows letting to benefits claimants (not that easy to find). It's the filling in of my SATR that reminded me I wanted to look into the best option.

As for CGT I don't think the property has appreciated in any meaningful way. I did wonder, if the worst came to the worst, if having it owned through the Ltd would protect me in case we ever ended up defaulting - can't be too careful - but I would imagine the answer is no!

Who was that with out of interest?

[d000hg]

Now there's a question. If I remember I'll look it up. The house is in a poor NE town - 4bed semis for £60k - we bought it as newly-weds just after graduating in around 2006 and it's such a high proportion on benefits that selling is a tricky proposition... we're stuck with it but luckily have a mortgage of £60/month and rental income about £400/month from Mr. Cameron.