At what point do you remain here, and sell your 'home', back

[JR8]

.... home'.


As I wrote just earlier on another (Banking) topic. ...
---
Having just done my latest tax return, I'm going through similar thoughts, plans... re: my home. Sell now, or face an additional GBP30-40k future liability on CGT for as long as I own it, but live abroad. It's regrettable how such things force decisions, especially when you do not feel entirely certain what future plans might bring. One for another topic maybe... ...
---

I'm in something of a quandary that I have not faced before. I have done expat postings before, but always with the idea in mind that come the end I'd return home to my former home.

This time it's different, and in many ways life has moved on:
- I've been away in total 6+ years this time
- My home has risen materially in value as the neighbourhood has transformed ('gentrified').
- It is in a now a very trendy neighbourhood of west London, and is in a good impressive building.
- It's simple to let out, and yields a decent income
- It would be easy to sell, and the agent I've used for years and almost fully trust (if you know what I mean) has commented 'JR8: Just tell me when you want to put it on [to the market]'. He's close to politely badgering me as he can get.
- I 'architected' the re-build/re-modelling and it provides much of the space/amenity we might wish for from such a property, in such a location. I perhaps feel more of an attachment to the place than I otherwise might.

On the flipside:
The biggies:-
- I don't know if after years away in more... mature.... 'boring'( staid?) locations, about 6 and counting, if that location would fit my lifestyle any more. It's what you might call (now) 'Urban trendy/wealthy', but with the last of the brothels and crack-houses that were always there, still being there somewhere in the neighbourhood I'm sure. Maybe it is similar to what the likes of Tribeca and before it Soho (and Greenwich) in NYC went through. I.e. the neighbourhood is transformed, but have your personal desires transformed and matured with it even beyond that? [Side-note: Assuming the writer 'PrimroseHill' hails from there, and has been away some years, she might be faced with a similar conundrum].
- I'm now married. My wife loves the 'London hubba/hubbub', but that is perhaps more as a visitor than for a home. She has previously lived in London for some years long ago, but she lived in the mature/settled neighbourhood of St. John's Wood (rich Jewish aunties 'R Us).
- I've been a landlord c20+ years. I really REALLY have had enough, it's achieved what i wanted, and I'm done with it. So keeping it as a rental just does not sit well with me at all (I get a feeling of: 'What, can I never ever retire/move-on from this slog?').

- New tax rules (CGT) are coming in soon. It's a very confusing picture, and I've yet to get my head around it. This is despite me historically being on the ball with such things. The changes coming are almost impenetrable.
- The building is share-of-freehold. In some ways ideal, we've all run the place co-operatively. But these days as I've mellowed, I find the neighbours, career bankers and that type, revealed for the cut-throat double-dealing people that well, that they need to remain in such jobs into their 30/40s I suppose. You don't stay in such jobs at that stage by being an all-in nice guy, and that inevitably washes over into neighbourly relations.

- A current thought is sell up before the tidal tax-hit grows. It concerns losing accumulated historic allowances, so even with nil further gain, I would lose big-£ from the historic gain each year from April 2015.
- Buy a house in a regional city maybe Cambridge or similar. I spent a year living there and have very fond memories. My wife has visited and enjoyed it. It is an hour by train to London, and would 'triangulate' conveniently with the rest of my family, much more so than London does.
- We could buy a house, freehold, so no rottweiler neighbours in the same building.
- We could afford a car.
- We could even get a place with a small garden (rare in London). It would be manageable, we could sit in the garden, have a BBQ and friends over [wow! lol], we could even consider keeping pets (something I'd never inflict upon a pet in a flat in London). We'd have space for friends to stay.
- 'The hubba' of London would be an hour away, and if going we could stay with friends, or if needs be make a weekend of it and stay at a nice hotel (not cheap, but a damned sight cheaper than owning there).

The unknown:
- If I sell now, it might make sense tax wise, and banking the proceeds would give something of a feel of beginning afresh with a clean slate. Each time I move abroad, it comes with something of a parallel 'leap into the dark', so starting with a clean slate does not intimidate me.
- Selling the place, in the same neighbourhood as I bought my first home (20+ years ago), 2nd home, and my later investments would doubtless be a mental uprooting. But I moved there simple because it was convenient (rough) but still cheap. Beyond sentimentality I have no reason to stay.
- But if I (I own it, but am planning for 'us' for the future) regretted selling it, and moving out [of London] it would be unlikely I could afford to buy back a similar property.


Perhaps ideally:
- We'd return there, and see how we feel about it. But then...
--- the tax consequences are significant.
--- I'd have to deal with my $hitty neighbours, and I'm sick to death with all of that.
--- If we found it's just too full-on, then we face the cost and stress of moving twice.
--- We'd have to throw out the current rent paying tenant.

----------------------------
I know there are no simple answers... but perhaps others have contemplated similar before, or will contemplate such matters down the road...

My gut feel is just to sell up and go for it; start afresh take the money whilst it's there, reset the plan for the future, and one way or another it'll work out. My gut feel is also that the gut feel itself is a distillation of years of subliminal thought, and so hopefully quite well informed. The change considered is not THAT radical within an expat/global context. What's that UK TV programme re: people planning to emigrate called, 'No going back' or something? But after so long away it feels a bit like... er, playing a big hand of cards in the dark ...

Do any of the others here consider such things, to what extent they might 'go back', and if so to what... ?

[Primrose Hill]

My 2cents, JR8. Out of curiousity,*west london* gentrified* brothels*. Nottinghill the dodgy end aka Hugh Grant? Bayswater?
I have only been away for 3years. My 2cents, ok. Do you need the money? IE the lump sum? If you don't, why not just hang on to it? Like you said, once you sell your toe hole in the London market, its difficult and almost impossible to buy the same property again. You will be priced out. The thing about the Felicity Kendall Good Life is that it maybe a state of mind. By the time you get the country house, rural with village pub and shops yet only an hour from London, all sounds pretty idealistic. Is this still "your thing" in 2014/2015? Will it still be your thing when you are 55 or 75?
The other thing that I find is that the "England" you left behind may not be the England of today. The ideal countryside may now have Cross Rail or HS2 running through it from 2017 etc. The wee post office has gone bust and bin men come once every 3weeks. The return day ticket to London will now cost GBP90.00
Rental yield is still giving you a conservative 4-5%. Unless, unless, the gains are so much that your apartment is now worth over GBP1.8m, then I would cash it in. Sell it, split the monies, buy a place in the country and you still have enough money for a pigeon hole in London.
There are times like you, I am fed up with the neighbours in one of our property. They refuse to spend any money in doing up the building etc.

[maneo]

.... home'.
---
Having just done my latest tax return, I'm going through similar thoughts, plans... re: my home. Sell now, or face an additional GBP30-40k future liability on CGT for as long as I own it, but live abroad. It's regrettable how such things force decisions, especially when you do not feel entirely certain what future plans might bring. One for another topic maybe... ...
---
On the flipside:
The biggies:-
. . .
- I've been a landlord c20+ years. I really REALLY have had enough, it's achieved what i wanted, and I'm done with it. So keeping it as a rental just does not sit well with me at all (I get a feeling of: 'What, can I never ever retire/move-on from this slog?').

- New tax rules (CGT) are coming in soon.
. . .
- A current thought is sell up before the tidal tax-hit grows. It concerns losing accumulated historic allowances, so even with nil further gain, I would lose big-£ from the historic gain each year from April 2015.
. . .
The unknown:
- If I sell now, it might make sense tax wise, and banking the proceeds would give something of a feel of beginning afresh with a clean slate. Each time I move abroad, it comes with something of a parallel 'leap into the dark', so starting with a clean slate does not intimidate me.
- . . . Beyond sentimentality I have no reason to stay.
- But if I (I own it, but am planning for 'us' for the future) regretted selling it, and moving out [of London] it would be unlikely I could afford to buy back a similar property.
...
--- the tax consequences are significant.
--- I'd have to deal with my $hitty neighbours, and I'm sick to death with all of that.
--- If we found it's just too full-on, then we face the cost and stress of moving twice.
--- We'd have to throw out the current rent paying tenant.
----------------------------
Do any of the others here consider such things, to what extent they might 'go back', and if so to what... ?

Those liable for paying US taxes face a similar situation - whether or not to sell the propertу within 3 years of leaving* to take advantage of a significant homeowners exclusion for capital gains.
So, yes, tax implications are an important factor.

After letting others live in one's old home, it may difficult to go back.
New homes age.
Renters may not have taken care of it as well as you would have.

If there's no real sentimental reason to keep it, and if you don't expect any phenomenal future gains better than what you could do investing elsewhere, then yes, get rid of all those nagging issues and don't look back.
If you can do better investing the money elsewhere, you should be able to afford to buy something similar in the future with those proceeds.
When you do decide to return you might even want to downsize or simplify and find somewhere easier or better to live anyway.


* Eligibility for this exclusion is that the home was a primary residence for 2 of the last 5 years: 5 year window - 2 years min. as residence leaves just 3 years for "US tax persons" to act.

[PNGMK]

Do you have any heirs? That complicates thing vastly.

We have two homes at 'home' - one in the US and one in Oz.

No plans to sell provided there is no need.

What else would you do with the money? Hookers and blow?

[JR8]

Isn't that a good question.

I'd spend more than I might have imagined on a Mercator map of the world (if not atlas). An ounce of marching powder, and a fridge full of DP....

Do those all together, and thus decide where the next holiday should be.



[/Naturally I jest lol]

[maneo]

Do you have any heirs? That complicates thing vastly.

Heirs?

Sure, but what's that got to do with it.

Am now embarking on spending as much of the kid's inheritance as I can.
Builds character.

[JR8]

Am now embarking on spending as much of the kid's inheritance as I can.
Builds character.

I've seen the lives of a couple of friends pretty much destroyed by the knowledge that they're in line for either a trust fund, or fat inheritance. There seems nothing quite like it to kill ambition, achievement, and happiness.

I'm in two minds.
- After ensuring my wife is well taken care of, leave any other bequests to people old enough to have already 'made their own way in life'. That seems the most beneficial route. The alternative of ...
- Leave bequest/s to charity seems something of a minefield, given many charities are simply special-interest groups who pay the senior staff/board more than I've probably ever earned...

Tricky one.

[beppi]

I'd never sell my home.
A house maybe, which I own somewhere, but only if it's not my home.

[PNGMK]

Isn't that a good question.

I'd spend more than I might have imagined on a Mercator map of the world (if not atlas). An ounce of marching powder, and a fridge full of DP....

Do those all together, and thus decide where the next holiday should be.



[/Naturally I jest lol]

Multi-generation assett holding is the best guarantee of serious wealth generation. That's why I ask.....

[maneo]

Isn't that a good question.

I'd spend more than I might have imagined on a Mercator map of the world (if not atlas). An ounce of marching powder, and a fridge full of DP....

Do those all together, and thus decide where the next holiday should be.



[/Naturally I jest lol]

Multi-generation assett holding is the best guarantee of serious wealth generation. That's why I ask.....

There is no guarantee.
It could happen only if the subsequent generations have not had their ambition and achievement "destroyed by the knowledge that they're in line for either a trust fund, or fat inheritance," as JR8 put it so well.

It is far more likely that what is not lost by the 2nd generation will be lost by the 3rd generation:

http://money.cnn.com/2014/06/25/luxury/family-wealth/

[Primrose Hill]

Isn't that a good question.

I'd spend more than I might have imagined on a Mercator map of the world (if not atlas). An ounce of marching powder, and a fridge full of DP....

Do those all together, and thus decide where the next holiday should be.



[/Naturally I jest lol]

Multi-generation assett holding is the best guarantee of serious wealth generation. That's why I ask.....

Duke of Westminister

[JR8]

I used to work in 'Private Client Banking', and a big aspect of it was 'generational planning'. One facet of course was tax efficiency, but another was what to leave inheritors, and at what point in our client's lives. We would not 'lead' any decisions, but it was fascinating to be in attendance when a client laid out their entire financial position, and what their hopes for it were, and how they considered those affairs.

As a result from that, and directly amongst a handful of childhood friends, promises of wealth known at an early age can be highly detrimental. It is far better if a future beneficiary is guided to make their own way (what ever it is, and however 'rich' (or fulfilled) it might make them) before the distraction of easy money comes into play.

That kind of considered and considerate (yes!) stewardship of a family's accumulated wealth/estate is far more certain to carry on down the generations. In simple terms: It is far more likely to do good. Than the likes of a youngster winning the pools, blowing the lot, and half-destroying them, any marriage, and their family in the process.

[Primrose Hill]

how true. I remembered similar situation when I audited 2files - one was a man that was in his late 50s early 60s, I think and the advisor "advised" him to cash in on his SIPP or some pension pot equivalent and he had no savings left and was living from paycheck to paycheck. I remembered bringing this to my boss at that time and he said it was ok. It was so wrong in so many ways. The other was this old lady that had a few million sitting on a discretionary account. She used to send her broker/advisor a GBP50 Waterstones gift card. She had in the space of 18months wrote over a dozen or so letters to her broker asking for an explanation as to why she is only left with GBP500,000 in her portfolio even though she started with a few milion pounds that her deceased husband left her with. My boss insisted that she was not complaining and the advisor's actions did not merit further investigation as it was merely grumbles, she was not complaining. There were occasions that the broker would write to her telling her that he would sell; i.e BP shares and buy Royal Shell Dutch, since Saddam was going to lose the war and lets take the profit etc etc.
sharks

[JR8]

Churning a clients portfolio for fees/commissions. Sick-making...

[Girl_Next_Door]

My husband and I had numerous discussions on this before. Currently, we own a place in London and the apartment we are living in Singapore. Both of us have no desire to retire in London or Singapore. However, we have (kinda) agreed that we will not sell the Singapore and London properties.

Both of us works in an environment that has numerous restrictions on personal trading, and we don't really have faith in fund managements (again, because of his job). In our opinion, properties is the easiest options for us to preserve and hopefully grow the funds in a very long term perspective. Our mortgage barely forms 10% of our combined income. Even if one of us decided to take a career break, and we are not able to rent out the property, we should be fine.

On the property, we would let the kids choose which country that they want to study (SG or UK) and having a property will facilitate us in visiting them. If they decided to work in either country, they may rent our apartment for a small rent. They should not have the expectations that they will "naturally" inherit the properties when they turn of age. The properties is largely for their convenience of education and for us to visit in the future. Given the obscene amount of rent and cost of living in these 2 cities, we just think that, if we sell either place, we will never be able to buy back the same property in 2024 and beyond. We don't need the cash immediately, so would prefer to just rent it out until the big education decision is made.

If the kids decided not to study in either country, the option to sell then, is still available.

Going back to you, it really depends on which stage you are at, currently. And what is your retirement plans are.