Tax on BTL

[So]

drainbrain said:

Want a fag packet method?

Take the gross achievable rent . R

Multiply by 65% . R x 65%

(note: 65% is for realists. Optimists use 70% and pessimists use 60%)

Subtract the mortgage cost . R x 65% - M

= Gross income for tax purposes.

So R x 65% - M - T = yours to spend.

Over a period of 5-10 years that may be surprisingly accurate.

Edited by drainbrain on Thursday 17th August 16:30

I predict that it will prove inaccurate over the next 5 years, if he holds the property personally.

[drainbrain]

So said:

I predict that it will prove inaccurate over the next 5 years, if he holds the property personally.

Y?

[So]

drainbrain said:

So said:

I predict that it will prove inaccurate over the next 5 years, if he holds the property personally.

Y?

Due to the mortgage interest relief changes. It buggers up your model.

[drainbrain]

So said:

Due to the mortgage interest relief changes. It buggers up your model.

Nope. It doesn't. The only thing that impacts on the model is a substantial divergence from the 60/65/70% figure.

[So]

drainbrain said:

So said:

Due to the mortgage interest relief changes. It buggers up your model.

Nope. It doesn't. The only thing that impacts on the model is a substantial divergence from the 60/65/70% figure.

Currently it is R x 65% - M - T = yours to spend.

By 2020 it will be:R x 65% - T + 20%M = yours to spend.

[drainbrain]

the "T" or "M" amounts may change (as may the residual nett) but that doesn't affect the model (because it isn't modelled on "T" and/or "M" figures and the 60/65/70% isn't impacted on by changes to mortgage interest relief).

[liner33]

supercommuter said:

Thanks, very helpful. As you say, I am currently getting more than that in funds.

Maybe in the future!

If you are getting 7% plus from your funds EVERY year then stick with them

[So]

drainbrain said:

the "T" or "M" amounts may change (as may the residual nett) but that doesn't affect the model (because it isn't modelled on "T" and/or "M" figures and the 60/65/70% isn't impacted on by changes to mortgage interest relief).

Hmmm, not sure I would agree with you. But let's remain friends and agree that the 65% part is very useful indeed.

[drainbrain]

So said:

Hmmm, not sure I would agree with you. But let's remain friends and agree that the 65% part is very useful indeed.

I think in typical fashion I've tried to reduce something to a basic simplicity and really only succeeded in over-complicating it