150% tax for BTL investors?!?!?!?

150% tax for BTL investors?!?!?!?

Author
Discussion

IceBoy

Original Poster:

2,443 posts

220 months

Monday 24th August 2015
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Has anyone read this?

http://www.telegraph.co.uk/finance/personalfinance...

Am I the only one bricking it.

IceBoy

Countdown

39,690 posts

195 months

Monday 24th August 2015
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Depends on how much of your BTL investments are financed by borrowing and what your marginal tax rate is. These things can be mitigated depending on your individual circumstances.

GT03ROB

13,207 posts

220 months

Monday 24th August 2015
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http://www.pistonheads.com/gassing/topic.asp?h=0&a...

Check this out.....it's getting heated

BoRED S2upid

19,641 posts

239 months

Monday 24th August 2015
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I'd be bricking it if I were a higher rate tax payer and mortgaged up to the eyeballs on a BTL especially with mortgage rates set to increase in the next few years. It will do one of two things either cool the market or increase rents massively.

Frimley111R

15,537 posts

233 months

Monday 24th August 2015
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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."

sideways sid

1,371 posts

214 months

Monday 24th August 2015
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Presumably, this is not an issue if the property is owned by a Ltd Company instead of an individual.

Mudgey

682 posts

173 months

Monday 24th August 2015
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Hopefully this will bring house prices down a little bit!

coetzeeh

2,641 posts

235 months

Monday 24th August 2015
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Mudgey said:
Hopefully this will bring house prices down a little bit!
It may not bring prices down but will probably reduce house price inflation.

budfox

1,510 posts

128 months

Monday 24th August 2015
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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.

MTech535

613 posts

110 months

Monday 24th August 2015
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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.

Are you saying that it is morally wrong to rent out property you own?

GT03ROB

13,207 posts

220 months

Monday 24th August 2015
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MTech535 said:
Are you saying that it is morally wrong to rent out property you own?
Yes he is. He says the same on every thread about property rental or BTLs

MrSparks

648 posts

119 months

Monday 24th August 2015
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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.

RYH64E

7,960 posts

243 months

Monday 24th August 2015
quotequote all
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.

Are you saying that it is morally wrong to rent out property you own?
What he means is that it's morally wrong to have a mortgage on a buy to let property, those of us fortunate enough to own our properties outright won't be affected by the change...

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.

tescorank

1,985 posts

230 months

Monday 24th August 2015
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Don't forget you cannot claim 10% furniture allowance as well.

GT03ROB

13,207 posts

220 months

Tuesday 25th August 2015
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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?? biggrin

Frimley111R

15,537 posts

233 months

Tuesday 25th August 2015
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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.

budfox

1,510 posts

128 months

Tuesday 25th August 2015
quotequote all
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.

Are you saying that it is morally wrong to rent out property you own?
What he means is that it's morally wrong to have a mortgage on a buy to let property, those of us fortunate enough to own our properties outright won't be affected by the change...

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.
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.

RYH64E

7,960 posts

243 months

Tuesday 25th August 2015
quotequote all
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.

RYH64E

7,960 posts

243 months

Tuesday 25th August 2015
quotequote 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.
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.

MTech535

613 posts

110 months

Tuesday 25th August 2015
quotequote 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?