This is a bit of a “no brainer” as our friends across the water would say. Making a profit from improving your own home is MUCH easier than investing in another property, remember:
- It is easier and cheaper to raise finance on your home with lower interest rates and less restrictions.
- When renovating another property for investment and resale or rent the money spent on interest repayments while refurbishing, is money lost (this is why it is even more important to stick to a strict schedule when refurbishing other properties), whereas on your own home some of the interest on borrowing can be offset against the cost of living in the property, you would have had to pay a mortgage anyway!
- Last but certainly not least – any profit you make from selling your home is completely tax free!
- According to the Inland Revenue
“You will not have to pay Capital Gains Tax when you dispose of your home if all the following conditions are met.
* Throughout the period that you owned it, it was your only home.
* You did actually use it as your home all the time that you owned it.
* Throughout the period that you owned it, you did not use it for any purpose other than as a home for yourself, your family and no more than one lodger.
* The house and garden do not exceed 5,000 square metres (about one and a quarter acres – roughly the size of a football pitch).”
So in the UK at least investing in your own home is, easier, cheaper and in most cases free of tax on all the profits! For these reasons we recommend that, for investors new to property at least, the first investment you should make is in your own home.