Anne Murray is planning to buy a rental property, in addition to the family home she and Henry own. She is considering a property in Bristol costing £210,000. She has savings of £85,000 which she will use as a deposit but will need to borrow the remaining amount for the purchase. She has had a fixed-rate mortgage agreed in principle by Royal East Bank, for which she will be charged 4.75% interest. She wants to know what income she might expect to get on her investment. Local agents have estimated that the monthly rent may be £1,450 per month, with agent’s fees for managing the property being charged at 5% of the rent. Provide Anne with an estimate of the relevant costs of renting the property and the net rental income that she might expect to get. Anne has estimates for some of the other costs she will incur as follows: Repairs and maintenance per year £700 Property insurance per year £395 Mortgage arrangement fee £1950 Surveyors’ fees £350 Solicitors’ conveyancing fees £1050 Gardener £870 Explain to Anne what tax will be payable when she sells the property. Estimate the tax she might have to pay if she sold the property in ten years’ time for £300,000, assuming that all tax rates and allowances are the same as this year, and the incidental costs of the sale were £4,500.
Anne Murray is planning to buy a rental property, in addition to the family home she and Henry own. She is considering a property in Bristol costing £210,000. She has savings of £85,000 which she will use as a deposit but will need to borrow the remaining amount for the purchase. She has had a fixed-rate mortgage agreed in principle by Royal East Bank, for which she will be charged 4.75% interest.
She wants to know what income she might expect to get on her investment. Local agents have estimated that the monthly rent may be £1,450 per month, with agent’s fees for managing the property being charged at 5% of the rent.
Provide Anne with an estimate of the relevant costs of renting the property and the net rental income that she might expect to get. Anne has estimates for some of the other costs she will incur as follows:
|
Repairs and maintenance per year |
£700 |
|
Property insurance per year |
£395 |
|
Mortgage arrangement fee |
£1950 |
|
Surveyors’ fees |
£350 |
|
Solicitors’ conveyancing fees |
£1050 |
|
Gardener |
£870 |
Explain to Anne what tax will be payable when she sells the property.
Estimate the tax she might have to pay if she sold the property in ten years’ time for £300,000, assuming that all tax rates and allowances are the same as this year, and the incidental costs of the sale were £4,500.
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