Financial advice / ideas for a couple hundred K cash
Financial advice / ideas for a couple hundred K cash
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Discussion

garycat

Original Poster:

5,404 posts

240 months

Tuesday 19th February 2013
quotequote all
We have an offset mortgage of about £220K and savings of about £210K, consequently our monthly repayments are negligible and I'm wondering if there is something more creative I can do with the savings (apart from coke n hookers etc)

The cash has to pay off the mortgage capital at some point so what ever we do has to be pretty safe. My daughter, in her early 20's wants to have her own place so I'm thinking of purchasing a do-er up-er property they she can live in and pay a minimal rent to me while we do it up and maybe sell for a profit later on.

Since we used up all the money set aside for her uni fees to buy our current property, I think we owe her some assistance.

Or am I better just keeping it in the bank, or paying off the mortgage, or something else?

ringram

14,702 posts

278 months

Tuesday 19th February 2013
quotequote all
Calculator time..

Need more details, offset mortgage rate, your marginal tax rate, etc, etc...

An IFA will tell you for a price..

garycat

Original Poster:

5,404 posts

240 months

Tuesday 19th February 2013
quotequote all
Offset mortgage rate is 1.89% above base, so a £150K outlay on an additional property will cost us approx £300 per month.

And I've no idea what a marginal tax thingy is wink

AndrewO

689 posts

213 months

Tuesday 19th February 2013
quotequote all
Worth checking how long your offset mortgage is valid for.

ie when do they want their money back

garycat

Original Poster:

5,404 posts

240 months

Wednesday 20th February 2013
quotequote all
AndrewO said:
Worth checking how long your offset mortgage is valid for.

ie when do they want their money back
2027.

If I buy another property with the savings, and charge my daughter rent to live there, is that income taxable? If so, is there a tax efficient way around the problem? E.g. she "borrows" the money and is simply paying it back.

AndrewO

689 posts

213 months

Wednesday 20th February 2013
quotequote all
Rent is income to you unfortunately !!

In theory if she pays you the same as it costs you in interest/repairs/legal/etc then there's no tax to pay.

You would be better off gifting a lump sum to help her buy something for herself. I did something similar, put down the 5% deposit with the understanding I owned 5%. Tricky to get that back (relatives!!) but it did come back with a profit when they moved up the ladder years later. I didn't do anything legal, just word of mouth so expect to loose it and anything coming back is a bonus



garycat

Original Poster:

5,404 posts

240 months

Wednesday 20th February 2013
quotequote all
AndrewO said:
Rent is income to you unfortunately !!

In theory if she pays you the same as it costs you in interest/repairs/legal/etc then there's no tax to pay.

You would be better off gifting a lump sum to help her buy something for herself. I did something similar, put down the 5% deposit with the understanding I owned 5%. Tricky to get that back (relatives!!) but it did come back with a profit when they moved up the ladder years later. I didn't do anything legal, just word of mouth so expect to loose it and anything coming back is a bonus
I can't afford to lose it - it pays off the capital on my house eventually.

AndrewO

689 posts

213 months

Wednesday 20th February 2013
quotequote all
I'd go with buying a property in your name and renting it to your daughter.

Keep all your receipts and get a property valuation when you finished.

Any repairs, certain legal fees, interest are deductable against rental income.

Improvements and work before it was rented out to a tenant are Capital expenses and can go against your CGT bill when you sell.


z4chris99

12,527 posts

209 months

Wednesday 20th February 2013
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I'd give the cash to daughter to avoid CGT.

then put a % charge against the house.

this isn't advice blah blah blah