Anyone "Rent up and sail"?

Allan

Allan

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Anyone \"Rent up and sail\"?

Having seen the post "Liveaboard cruising.......it it a panacea?" I can't help thinking that renting out a house, rather than selling it maybe a better idea. It also seems a good way to have a small income to fund sailing. Does anyone do this as a sole income?
Allan
 
Re: Anyone \"Rent up and sail\"?

I am in the process of Renting Up and Sailing, but on a bigger scale than you may be thinking, (several properties).

I'm more or less rented up, the boat is in Lagos and from January I propose to be there much more than here.

I dont think you could rely on the income from 1 property to fund even a low budget liveaboard life.

Worst case scenario is that the rent doesnt get paid for several months.

having said that, i would definitely recommend retaining an interest in the UK property market, even if that means downsizing to release some capital.
 
Re: Anyone \"Rent up and sail\"?

Yes we rent out a house and a flat in London and it's our primary income (others being bank deposits, share dividends). The only real downside is that if you own property in the UK you remain a UK 'resident' liable for tax at an extortionate rate (unearned income). But we reckoned it was worth it to retain (and hopefully grow) capital.

if you've got any specific questions I'd be happy to try to answer them.
 
Re: Anyone \"Rent up and sail\"?

It didn't work out from a rental point of view only because the management company fooked it up properly.

The cruising life was brilliant, until then. I can't wait to get back to it.

That said, don't let my experience kill your dreams; I simply wasn't smart enough with the management company and with hind-sight, if I had given them less rope to hang themselves, they wouldn't have hung themselves and I'd still be cruising.
 
Re: Anyone \"Rent up and sail\"?

I have heard a number of stories similar to yours. My property will be administered by my son and rented out by the room. This should not only mean more money but if one person moves out only 25% of the income is lost. Not perfect but a help.
 
Re: Anyone \"Rent up and sail\"?

Yes, works very well for us. Sold House in country and flat in London to buy Marina house in UK and flat abroad. Some of the money is also self invested in a diverse folio. We cruise happily on the rental and investment income. (But we anchor 90% of the time and eat on board 70% of the time.)
 
Re: Anyone \"Rent up and sail\"?

[ QUOTE ]
The only real downside is that if you own property in the UK you remain a UK 'resident' liable for tax at an extortionate rate (unearned income).

[/ QUOTE ]

Not sure what you mean by an extortionate rate for unearned income... I thought all income was added up, (after allowances), and taxed in accordance with the various tax bands.

Also, owning property in the UK does not commit you to being a UK resident although, whether you are a UK resident or not, any income earned in the UK from residential property is taxed as if you were.

Cheers

Richard
 
Re: Anyone \"Rent up and sail\"?

On your first point I think you're right...sorry. For some reason I was thinking that unearned income got taxed at 40% after allowances. Cruising does not destroy brain cells, oh no. Out here the Yanks call it Cruiseheimers.

On the second point I think we're saying the same thing which is why I used 'resident' not resident. It is possible to gain non-resident status from simply being out of the country but all it does is delay tax payments on property rental to the end of the tax year. We didn't bother to go that route and our rental tax payments are made at source i.e. by the letting agency.

I'll go and lie down now.
 
Re: Anyone \"Rent up and sail\"?

[ QUOTE ]
renting out a house, rather than selling it maybe a better idea

[/ QUOTE ]

I think the short answer any financial advisor would be is "yes, it's the better option, if you can do it", and yes, that's what we do.

At the risk of the thread devolving into one about tax and property, dependant upon how long you have owned a property, you are limited as to how long you can rent it out before the property becomes subject to capital gains tax, even it is your 'primary residence. Which is a pain.

We have to sell up soon and downsize or the benefits of the rental income will start to be chiselled away by CGT.
 
Re: Anyone \"Rent up and sail\"?

My accountant told me that if you live in your rented property again for less than a year, then it can be re-established as your primary residence. I'm not clear as to whether this will avoid all CGT during the rental period.
If you sell it only to purchase another property, that would help too I believe.
 
Re: Anyone \"Rent up and sail\"?

As I said, it would be easy for this to digress to a CGT debate, but briefly using our example:-

We bought the 'primary residence' property 1999, and it has been rented out since 2003. The CGT Tax law ignores the last three years, so if we sell now there would be no CGT.

Here's the rub. Irritatingly, if we keep it for another 3 years without renting it, those years would be ignored under the same rule, but then the 3 rented years wouldn't be ignored, hence we would be liable to 3/7ths of the capital gains. i.e. 3 years rented out of 10 owned, but last 3 years ignored.

We found this ourselves from research and had a tax advisor confirm it - simply because it seemed unfair somehow. We thought, "can't be right", but thats the way it is.

Of course everyones circumstances will differ (as in how much Capital Gains there has been / how much it's worth it to rent etc), but that is ours.

Edited for some dodgy maths - but either way the answer remains the same
 
Re: Anyone \"Rent up and sail\"?

This alarming! Do you mean that you could be taxed on the increase in value of your house while it is being rented and while it remains your primary residence in the UK. That would seriously scupper my plans!

Or is it, that you can be clobbered for CGT when you sell it, if you have not lived in it for a while or if it is not your primary residence?

If the former then the rules have changed since I was last overseas and I will need to seek some professional advice.



EDIT: This 'crossed' with your reply which makes it clearer. Does that mean that to reduce your CGT liability to zero you must ocupy your house or leave it unrented for 10 years?!
 
Re: Anyone \"Rent up and sail\"?

[ QUOTE ]
Or is it, that you can be clobbered for CGT when you sell it,

[/ QUOTE ]

Yes, I'm just talking about CGT when you sell it.

Sorry if I panicked you /forums/images/graemlins/grin.gif I'll read back but I thought I was clear.


I was just adding this because it might be relevant to some as it was to us. If you've owned your house for donkeys years it wouldn't have much effect.

Another 'ploy' is that you could argue that your property didn't go up during the period it was rented, (as happens to be a fact with ours) but that isn't stated in black and white in the tax law so you'd be at the mercy of the particular taxmans interpretation.
 
Re: Anyone \"Rent up and sail\"?

Thanks, looks like it will affect us. In the past, we have had no problems by virtue of it being our sole residence.
 
Re: Anyone \"Rent up and sail\"?

Hi thanks for all the help.
As I don't plan to travel too far away at present (just UK and Ireland). I will be using the house as my UK address if they insist I am resident then there will be no CGT.
Allan
 
Re: Anyone \"Rent up and sail\"?

Hi Allan,

We have both a rented house and various financial interests not related to property. It really depends on how much you earn versus spend...............as others have said anchoring is free (usually) but it is not as convenient as a marina. Just as an aside I hope my other post has not put you off completely!

In my case the funding was only a small part of a very big picture..............one which was not for me...buy might be for you.

Either way good luck

Cheers

Chox
 
Re: Anyone \"Rent up and sail\"?

We've rented our house for the past 5 years while we cruise the Med.
Key points are:
- you must have a reliable agent
- keep the rent a tag below local market rate, important to maintain full occupancy
- unfurnished is MUCH less hassle than furnished
- ensure contracts signed and take out additional insurance for any legal or non payment situations (although we have had none!)
- do not accept short term lets
..............GOOD LUCK!
 
Re: Anyone \"Rent up and sail\"?

We intend to sell our house and buy an apartment in the centre of town. The basis of this is that it will be:

a) Easier to rent out
b) Easier to maintain (no gardens etc - plus most areas are covered by the management company)

We intend to live in the apartment for a couple of months before we go and a couple when we return, before selling ti to finance the purchase of another house. Hopefully we can convince the authorities this is therefore our primary residence and avoid CGT on sale!

Any ideas on whether this would work?

Jonny
 
Re: Anyone \"Rent up and sail\"?

Cannot comment of the house v's town centre flat as I do not know where you live - but houses obviously generate more rent and are usually longer term lets.
Best to talk to a tax specialist on CGT, we've owned our property for 26 years and have minimum CGT exposure (according to the tax specialist!)
 
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