What are the pitfalls of investing in a rental property?
QWE HAVE some money languishing in the bank, earning nothing.
We are in our late 60s and are wondering if we should invest in a flat to rent out for a few years. What should we be wary of?
ALOTS of things. Firstly, you need to consider the costs involved in the purchase of a property, on top of the purchase price, such as solicitor’s fees, plus the fact you are buying at a time when prices are at a record high.
You will need to ensure the property is safe to rent out and you will have to pay for gas and electrical safety certificates (and pay for any updates or work that needs carrying out), and factor in potential maintenance costs such as boiler services, repair and replacement, and insurance.
You will need to work out if the rental income will push you into being liable for tax, and whether, over a short period of time, if the costs and fees involved and potential capital gains tax make it actually worth your while.
I’M IN my late 50s and want to access a pension as I have been made redundant and think it’s time for me to give up work.
Can I take it as a lump sum?
ATHIS will depend on the type of pension savings you have because not all pension contracts allow you flexi-access.
If it’s not possible with your scheme, you may be able to transfer it into a new plan that does allow you to withdraw it as a lump sum.
You need to be wary that you are not giving up any guaranteed benefits by doing this and should be careful you don’t end up paying too much tax. Just the first 25% is tax free.
I would check with an independent financial adviser to ensure you are making the right decision, since it’s such a big decision.
CAN we give our grown-up children some money for Christmas? We are thinking of giving decent sums to help them out during this tough time.
Is there a limit on how much we can give without any tax implications?
YOU can each gift £3,000 per tax year without any tax implications, and go back one year if you’ve not already gifted in the previous year.
If you do give more, it will be classed as a Potentially Exempt Transfer and the seven-year rule applies, where inheritance tax can be charged on gifts made three to seven years before death.
MY HUSBAND and I want our son to have the power of attorney for both our health and finances. Do we apply as a couple for this or as individuals?
YOU each have to apply on an individual basis. However, if you are using professional services, such as a lawyer, you will usually get a discount for couples, and for setting up both welfare and finance LPAs.