Saturday, Jun 23, 2007
Amatuer BTLers - prepare for a hammer blow!
BBC: Call for action on buy-to-let
BTL mortgage tax breaks not available to BTL under scrutiny.
Posted by nearly30 @ 09:09 AM (202 views) Add Comment
16 Comments
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1. nearly30 said...
See also:
Beware risks of buy-to-let tax break
Landlords can offset the interest they pay on their mortgage against rental income to reduce the amount of tax they pay.
For example, say you receive £10,000 a year in rent but pay £8,000 in mortgage interest, you would only pay tax on £2,000. Interest-only mortgages enable you to maximise this benefit because the level of debt remains the same. If you opted for a repayment mortgage, the amount of interest you pay, and therefore the tax relief you get, reduces as you pay off the capital.
I'm glad this is getting continued coverage.
Smells very similar to the whole Private Equity scam and goes to show that there is an increasing element in society that can afford debt leverage then fiddle the books to their advantage.
Something ordinary folk cannot do due to low equity and therefore do not have this debt 'circulation' to hand.
IMHO - the Cornish, Lake District and Welsh radicalised groups are the most visible reaction to this 'Brown loophole' and with the VIs not doing anything about it - the wealth, inequalty and opportunity gap is getting wider by the second.
2. Natalie Bertoncello said...
so
3. confused76 said...
in the US, resident-owners can deduct mortgage interests from their income taxes, and do not pay CGT if buying a new first home with the proceeds of the sale of their previous first home. i think that is much more fair
4. talking rot said...
Gordon Brown will never allow changes to the tax-advantage of Buy-To-Let. A change of this scale would result in many BTL investors having to sell their properties quickly - entering into a FORCED sale. This would precipitate a decline in house prices in neighbourhoods with a high percentage of BTL-properties, and possibly a general decline across the UK. Such an event would be a double whammy for Gordon Brown. He would loose a significant source of revenue because of the secondary economic impact. He would loose his reputation as a good manager of the UK economy as the general public would loose the "feelgood" factor. The loss of the "feelgood" factor was a large part in John Major's destruction. Gordon Brown will not allow it.
Dream on BBC. Dream on guys.
5. Scott said...
The crash will happen whether Gordon allows it or not. True he will not allow anything he can control to happen, but we all know it is the outside factors that count just as much, and the market only works with first time buyers in it and Gordon cannot force new people to buy properties that they absolutely cannot afford.
6. wiltshire said...
Talking rot - I understand your opinion. However, I think the times are changing and I think people are waking up to the fact there is something very wrong with British society. Most of the people in this country are working more now than ever, are working more than most other European countries and yet is this bringing happiness and financial security to people? No, of course it's not and this is being felt by practically every household in the land. I think the days of New Labour just telling people "you feel great" and people automatically saying "yes, we feel great" are over. The spotlight is going to be slowly turned on every little nook and cranny where economic unfairness is allowed to flourish and Gordon Brown is going to have to start coming up with some serious answers to the questions he's going to be asked in the coming few years.
7. confused76 said...
TR,
sounds like you think that nothing can be changed...
well, that s not true
a. tax rules can be changed for future BTLers, but do not apply retroactively, in which case no forced sales (which I agree should not be forced, since no one wants to destabilize the economy)
b. GB can introduce DEDUCTIONS for first time buyers, eg US-style interest deduction from individuals' taxable income. I think this should be balanced by tax increases for property investors
c. As in many countries incl RoIreland, FTB exemption from stamp duty
d. ... many more options...
lets see...
8. Timebomb said...
TR. Since you have mentioned a feel good factor, I wonder who is really feeling good now? Surely not most of the first time buyers and people who simply can't afford a house.
History repeats again. Boom & Bang, as far as our short memory serves.
9. talking rot said...
Wiltshire, Con__76
I hope and wish that you are right but I can not see Gordon Brown doing anything which might jeopardize his chance of winning an election. Perhaps I'm paranoid, but I saw the whole point of putting property into a SIPP as a means to uphold property prices. I recall this was defeated at the 11th hour. I wouldn't put it past Mr Brown to try a similar trick in order to sustain the outrageously high house prices.
Thank you for your thoughts.
10. inbreda said...
"The spotlight is going to be slowly turned on every little nook and cranny where economic unfairness"
I hope so - starting preferably with the disgusting fact that they allow tax havens such as guernsey and jersey to exist.
11. wiltshire said...
Talking rot - you're right, Gordon Brown will try every trick in the book to maintain his position.
But I do think that people are starting to get a bit fed up of being told everything is fine when they know full well it isn't. For a decade or so most people have been made to feel well off but that feeling is quickly ebbing away and there are now daily media reports highlighting the 'swindle' that has been going on. Personally, I think we could be moving into a period where people start to get militant again. The British public have been bought off for long enough and all it's amounted to is bigger financial worries for most, whilst the lifestyles of the rich just become more and more obviously excessive.
12. Scott said...
I hope we don't become militant wiltshire. I was dismissed from the navy due to medical reasons.
13. royston said...
Guys,
Let's get one thing straight, BTL investors are a minority in this country. - a small minority! If the majority (who either own only one home or no property at all) turn on the multi-property minority, politicians will turn on them with a speed that will make your head spin! It just hasn't become a big enough or loud enough issue yet. But it will..........."For the times they are a-changin'."
As for the 'feel good factor'. The majority of under-35s in this country have given up hope of ever owning their own home - where's the feel good factor in that? Our credit-junkie culture means that kids are accumulating £30k-£40k in credit card debt before their 21st birthday - where's the feel good factor in that? Parents in their 50s and 60s look at their children in good jobs who are unable to buy starter homes in their own country - where's the feel good factor in that? Parents in their 50s and 60s are having to take our substantial mortgages in order to help their children on to the property ladder - where's the feel good factor in that? We can all cite the exception of the childless 60-year-old living it up. But this an exception. Let's face it, the feel good factor is a myth!
14. confused76 said...
Agree with Royston. BTL is a small minority and GB will sell them off as soon as he understands he is losing votes among the oppressed majority of FTBs. another factor that can catalyze this is if the libdem embrace the cause of the FTBs (with the tories -up to now -too afraid to speak on the subject because of their landlord constituency and loads of vested interest)
15. paolo88888 said...
OK, so you think there will be HPC and so you think renting is great and BTL landlords are mugs. Why are you all trying to kill the goose that is laying the golden egg? What if these landlords google to this site by accident - you are encouraging them to turf you out so they can sell their BTL and you will have to buy!
All other businesses deduct their financing charges to calculate their taxable earnings. This is a long established principle which is unlikely to be changed. BTL is just an application of the same principle.
16. confused76 said...
Paolo8782829929
you sound very junior to me, probably landed your first real job, I do not know...
laws about private tenancy have changed 10 times in the past 30 years, and are different in every single European country. and so have tax rules on the purchase of property. so do not expect any stability and certainly your "long established principle" is B/S.
"All other businesses deduct their financing charges to calculate their taxable earnings" instead is a stable principle since it is concerned with "businesses", but BTL is not a business it is a form of unproductive investment and wealth re-distribution. So why do you think the government will stand still. Just google "MIRAS"... of course you do not know what it is, sure you are too young... and rush selling your studio in South Ken before the wind changes (once again)