1st BTL now...am I crazy?
Discussion
Eric Mc said:
CarlosFandango11 said:
Eric Mc said:
And always ensure you factor in the Capital Gains Tax liabilities that will arise.
And always ensure you factor in any capital gains that may arise.Ozzie Osmond said:
... and you're still a 20% taxpayer????
That I do not understand. Unless you are a full time landlord renting out some very cheap properties. Or making very big pension contributions to suppress your higher rate tax.
Or splitting the rental profits between more than one individual.That I do not understand. Unless you are a full time landlord renting out some very cheap properties. Or making very big pension contributions to suppress your higher rate tax.
Eric Mc said:
Ozzie Osmond said:
... and you're still a 20% taxpayer????
That I do not understand. Unless you are a full time landlord renting out some very cheap properties. Or making very big pension contributions to suppress your higher rate tax.
Or splitting the rental profits between more than one individual.That I do not understand. Unless you are a full time landlord renting out some very cheap properties. Or making very big pension contributions to suppress your higher rate tax.
I'm also 'retired' but at 60 a few years off state retirement age.
BoRED S2upid said:
Why interest only? If it's going to form part of your pension don't you need to pay off the mortgage to enable the income to currently £450 pcm to go into your pension?
Do the calculation on repayment only and if the income still works then go for it. Interest only IMO is pointless.
Interest only gives you an income and the capital gains as the house price rises. You are able to put more cash aside just incase of voids or large repairs. with the rest of the income you can choose to pay off the mortgage, invest elsewhere (inc more property) or spend it as any other income.Do the calculation on repayment only and if the income still works then go for it. Interest only IMO is pointless.
I initally thought repayment was the way to go when we started renting out our house. Over time it has payed off the capital so we can get better mortgage rates. The downside is that there's less money available to put towards voids or repairs. In the new year we are going interest only to increase cash flow and decrease my stress levels!
98elise said:
I'm a landlord and I know quite a few other landlords. We all let as income, and capital growth is just a bonus. I only buy if I can achieve over 6% yield, which gets me between 12-14% return on cash invested (at 75% LTV). As rents rise those % also rise. As part of a balanced pension plan thats a good return on cash. I doubt I'll ever see the captial growth cashed.
Obviously some LL's will invest for growth, but I doubt its the majority.
Would it be ok if I sent you a few questions via PM?Obviously some LL's will invest for growth, but I doubt its the majority.
Eric Mc said:
You did note I said "In most cases".
There are occasions when Market Value substitution needs to be considered.
Even the link you have provided uses the word "may".
Nope, you said - 'None. If you give something away you can't have made a gain as you have received no proceeds on a sale.' - which is complete tripe. There are occasions when Market Value substitution needs to be considered.
Even the link you have provided uses the word "may".
If you're simply gifting the property, and there is a gain after all allowances are taken in to consideration, you'll be liable to pay CGT on that gain. The 'May' in the link to refers to this.
poocherama said:
Nope, you said - 'None. If you give something away you can't have made a gain as you have received no proceeds on a sale.' - which is complete tripe.
If you're simply gifting the property, and there is a gain after all allowances are taken in to consideration, you'll be liable to pay CGT on that gain. The 'May' in the link to refers to this.
OK If you're simply gifting the property, and there is a gain after all allowances are taken in to consideration, you'll be liable to pay CGT on that gain. The 'May' in the link to refers to this.
"May" also implies "may not". In other words, in other circumstances these rules won't apply.
These are general fora. If people want specific advice on such matters they need to consult, and pay for, the right advice.
Why do people have to react so rudely?
Eric Mc said:
OK
"May" also implies "may not". In other words, in other circumstances these rules won't apply.
These are general fora. If people want specific advice on such matters they need to consult, and pay for, the right advice.
Why do people have to react so rudely?
Its not rude to point out when people make statements which are false. Thats the point of a discussion forum."May" also implies "may not". In other words, in other circumstances these rules won't apply.
These are general fora. If people want specific advice on such matters they need to consult, and pay for, the right advice.
Why do people have to react so rudely?
You're also referring to a link I posted in reply to your original comment. I think we can agree that 'May' is considerably different to the definitive 'None'.
dai1983 said:
98elise said:
I'm a landlord and I know quite a few other landlords. We all let as income, and capital growth is just a bonus. I only buy if I can achieve over 6% yield, which gets me between 12-14% return on cash invested (at 75% LTV). As rents rise those % also rise. As part of a balanced pension plan thats a good return on cash. I doubt I'll ever see the captial growth cashed.
Obviously some LL's will invest for growth, but I doubt its the majority.
Would it be ok if I sent you a few questions via PM?Obviously some LL's will invest for growth, but I doubt its the majority.
poocherama said:
I hope you're not an accountant spouting this nonsense on the internet.
If the property is not your main residence and you gift it to a child its seen as a disposal by HMRC and you'll be liable to pay CGT on any gains. You can use your/wifes CGT allowance and there are other allowances available. Go see an accountant!
https://www.gov.uk/tax-sell-property
I deliberately didn't respond to Eric's original post yesterday as he thinks I have a vendetta correcting him on here but....If the property is not your main residence and you gift it to a child its seen as a disposal by HMRC and you'll be liable to pay CGT on any gains. You can use your/wifes CGT allowance and there are other allowances available. Go see an accountant!
https://www.gov.uk/tax-sell-property
Eric - please take this the right way as I know you post here much more than me and seemingly have a "good reputation" but that isn't going to last posting that as an answer.
The basic CGT position on a gift of a chargeable asset is that the asset is deemed to be sold at OMV (Open market value) and the fact that no cash has passed doesn't stop HMRC wanting the tax as if it had.
David
sumo69 said:
I deliberately didn't respond to Eric's original post yesterday as he thinks I have a vendetta correcting him on here but....
Eric - please take this the right way as I know you post here much more than me and seemingly have a "good reputation" but that isn't going to last posting that as an answer.
The basic CGT position on a gift of a chargeable asset is that the asset is deemed to be sold at OMV (Open market value) and the fact that no cash has passed doesn't stop HMRC wanting the tax as if it had.
David
Noted.Eric - please take this the right way as I know you post here much more than me and seemingly have a "good reputation" but that isn't going to last posting that as an answer.
The basic CGT position on a gift of a chargeable asset is that the asset is deemed to be sold at OMV (Open market value) and the fact that no cash has passed doesn't stop HMRC wanting the tax as if it had.
David
It was a bit of brain fade on my behalf.
I don't mind being corrected. It's the manner of how the correction was made that upset me.
One of my mottos in life is "It's now what you do, it's the way that you do it".
sumo69 said:
The basic CGT position on a gift of a chargeable asset is....
Yes, although there is still the ability to "hold over" the gain in limited circumstances. Back in the day "hold over" was more widely available but the rules have been changed.For the benefit of anyone who's struggling to follow, CGT is charged on "disposals". Generally,
1. If you sell something, the Gain (net profit) you have actually made is subject to the CGT regime. The new owner then starts off with the price he has paid and moves forwards from there for his own CGT.
2. If you give something away, or sell it at "mates rates", what's used for the CGT calculation is the amount of Gain you would have made if you had sold at actual market value. So when making a gift you may trigger a tax liability even though you have received no cash at all. The new owner starts off with that same market value and moves forwards from there - even though he paid no money (or little money).
And finally, when someone dies the estate doesn't pay CGT, just IHT (Inheritance Tax, if any, over c.£325k). The CGT starting point for beneficiaries under a will is market value, so oldsters may wish to avoid paying unnecessary CGT in the later part of their lives.
Hope this is helpful. OzOs
With the announced changes over the next few years, you won't be able to offset the interest payments. If you are a 40% tax payer, that'll be an extra £180pm on top, you aren't coming out with much. The only real advantage is capital growth, which depending where the property is might not be that great either.
I've just sold mine - not worth the hassle any more!
I've just sold mine - not worth the hassle any more!
Thanks for all the advice, you've raised some brilliant points.
We purchased the property for 60k 5 years ago and it is now at 110k, which is at the top end for the area.
On that basis, because the capital increase is not going to be all that great, we're going to sell.
However, we are continuing on a LTB basis until we complete on our new purchase. Once this is done we'll sell our existing property. Any obvious flaws in this plan? It'll cost us a fair bit, (4k ish in estate agents fees, conveyancing again(!) and the ERC on the mortgage, plus a couple of months of mortgage payments) however we feel it'll be worth it in the long run.
Thanks once again for all the advice.
We purchased the property for 60k 5 years ago and it is now at 110k, which is at the top end for the area.
On that basis, because the capital increase is not going to be all that great, we're going to sell.
However, we are continuing on a LTB basis until we complete on our new purchase. Once this is done we'll sell our existing property. Any obvious flaws in this plan? It'll cost us a fair bit, (4k ish in estate agents fees, conveyancing again(!) and the ERC on the mortgage, plus a couple of months of mortgage payments) however we feel it'll be worth it in the long run.
Thanks once again for all the advice.
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