150% tax for BTL investors?!?!?!?
Discussion
Has anyone read this?
http://www.telegraph.co.uk/finance/personalfinance...
Am I the only one bricking it.
IceBoy
http://www.telegraph.co.uk/finance/personalfinance...
Am I the only one bricking it.
IceBoy
Posted on that thread, blimey....
"Here is a worked example assuming you, the landlord, pay 40pc tax.
NOW
Your buy-to-let earns £20,000 a year and the interest-only mortgage costs £13,000 a year. Tax is due on the difference or profit. So you pay tax on £7,000, meaning £2,800 for HMRC and £4,200 for you.
2020
Tax is now due on your full rental income of £20,000, less a tax credit equivalent to basic-rate tax on the interest. So you pay 40pc tax on £20,000 (ie £8,000), less the 20pc credit (20pc of £13,000 = £2,600), meaning £5,400 for HMRC and £1,600 for you. Your tax bill has therefore gone up by 93pc.
Now, say Bank Rate – and in turn your mortgage rate – rises by a small fraction, lifting your mortgage cost to £15,000, while your rent remains at £20,000.
You will have to pay £5,000 tax in this scenario, so you make no profit at all."
"Here is a worked example assuming you, the landlord, pay 40pc tax.
NOW
Your buy-to-let earns £20,000 a year and the interest-only mortgage costs £13,000 a year. Tax is due on the difference or profit. So you pay tax on £7,000, meaning £2,800 for HMRC and £4,200 for you.
2020
Tax is now due on your full rental income of £20,000, less a tax credit equivalent to basic-rate tax on the interest. So you pay 40pc tax on £20,000 (ie £8,000), less the 20pc credit (20pc of £13,000 = £2,600), meaning £5,400 for HMRC and £1,600 for you. Your tax bill has therefore gone up by 93pc.
Now, say Bank Rate – and in turn your mortgage rate – rises by a small fraction, lifting your mortgage cost to £15,000, while your rent remains at £20,000.
You will have to pay £5,000 tax in this scenario, so you make no profit at all."
This is all excellent stuff. There is something morally wrong about Buy to Let (sorry OP) and anything that might help to bring down the basic cost of shelter for those unlucky enough to have been born too late is OK by me.
Invest in companies that make things, or design things, or research things, because those companies generate jobs and wealth for the nation. Buying up houses because you can and making a profit from those who can't isn't the right things to do.
Invest in companies that make things, or design things, or research things, because those companies generate jobs and wealth for the nation. Buying up houses because you can and making a profit from those who can't isn't the right things to do.
budfox said:
This is all excellent stuff. There is something morally wrong about Buy to Let (sorry OP) and anything that might help to bring down the basic cost of shelter for those unlucky enough to have been born too late is OK by me.
Invest in companies that make things, or design things, or research things, because those companies generate jobs and wealth for the nation. Buying up houses because you can and making a profit from those who can't isn't the right things to do.
Invest in companies that make things, or design things, or research things, because those companies generate jobs and wealth for the nation. Buying up houses because you can and making a profit from those who can't isn't the right things to do.
Are you saying that it is morally wrong to rent out property you own?
So seeing as that's my property rental career over before it started, what's going to be the "replacement" small time investment opportunity?
More people playing with stocks and shares? investing in companies? or just settling for low bank interest rates....?
It won't stop people flipping properties though at least.
More people playing with stocks and shares? investing in companies? or just settling for low bank interest rates....?
It won't stop people flipping properties though at least.
MTech535 said:
budfox said:
This is all excellent stuff. There is something morally wrong about Buy to Let (sorry OP) and anything that might help to bring down the basic cost of shelter for those unlucky enough to have been born too late is OK by me.
Invest in companies that make things, or design things, or research things, because those companies generate jobs and wealth for the nation. Buying up houses because you can and making a profit from those who can't isn't the right things to do.
Invest in companies that make things, or design things, or research things, because those companies generate jobs and wealth for the nation. Buying up houses because you can and making a profit from those who can't isn't the right things to do.
Are you saying that it is morally wrong to rent out property you own?
It seems strange to me, in any other business situation interest on loans is an acceptable cost that can be offset against profit, I don't understand why buy to let should be any different.
MrSparks said:
So seeing as that's my property rental career over before it started, what's going to be the "replacement" small time investment opportunity?
More people playing with stocks and shares? investing in companies? or just settling for low bank interest rates....?
You've seen the financial markets recently?? More people playing with stocks and shares? investing in companies? or just settling for low bank interest rates....?
RYH64E said:
MTech535 said:
budfox said:
This is all excellent stuff. There is something morally wrong about Buy to Let (sorry OP) and anything that might help to bring down the basic cost of shelter for those unlucky enough to have been born too late is OK by me.
Invest in companies that make things, or design things, or research things, because those companies generate jobs and wealth for the nation. Buying up houses because you can and making a profit from those who can't isn't the right things to do.
Invest in companies that make things, or design things, or research things, because those companies generate jobs and wealth for the nation. Buying up houses because you can and making a profit from those who can't isn't the right things to do.
Are you saying that it is morally wrong to rent out property you own?
It seems strange to me, in any other business situation interest on loans is an acceptable cost that can be offset against profit, I don't understand why buy to let should be any different.
Frimley111R said:
i was chatting to wifey about this today. She says (tbh I only gave her a brief bit of info on this) that the chancellor is treating Buy to Lets are businesses and so they are being taxed as such.
Businesses can claim interest paid on loans as an expense for tax purposes. budfox said:
No, I'm saying it's morally wrong to own more than one property. I grant you that the super-rich will always have multiple homes and such things will never change, but for Joe "born at the right time" Average to use his fortunate position to make a tidy profit from the young (pushing prices higher by doing so), isn't right.
I know what you meant, I just thought it strange that changes that only affect the less well off investor are thought of as 'excellent'. Wealthy investors and professional investors won't be affected at all.budfox said:
No, I'm saying it's morally wrong to own more than one property. I grant you that the super-rich will always have multiple homes and such things will never change, but for Joe "born at the right time" Average to use his fortunate position to make a tidy profit from the young (pushing prices higher by doing so), isn't right.
If everyone could only own a maximum of one property, where would people who don't want to own and want to rent live?Gassing Station | Business | Top of Page | What's New | My Stuff