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House Price Crash Forum


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Everything posted by mightytharg

  1. It's not just a river in Egypt... Seriously, don't know what your agenda is but your initial post contains some lies. Your trying to suppress discussion makes it look as if you know they are lies and are not willing to try to back them up.
  2. If they are near retirement age, they would tend to be on a high salary so they get the full 40% tax relief, plus they have fewer worries about their investments being tied up for a long period. They will probably pay either zero tax or lower tax since they can use the house in their retirement when they may be in another tax bracket. Plus, for properties abroad, interpol currently has higher priorities to investigate (terrorism has been in the news a bit). I said 60% of what they paid. At 40% tax rate If they paid 100K, this would be seen as 166,666.66 with a discount of 66,666. You will notice that this is higher than 60% of 100K but I don't really know how high their taxes were so I used a more conservative estimate. The person I spoke to has set up a company as a special purpose vehicle for their purchase No need to be rude. I said, "With shares 50% goes to the government in dividend tax, with housing they lose absolutely nothing! That's right shares would have to do twice as well as housing just to break even!" I'm not sure what part of my comment you were disputing? Just to clarify, the dividends on shares are roughly analogous to the rental income from housing. Dividends incur tax in a SIPP, rental income does not. The tax on dividends is relatively small each year, but with continuous compounding over a period of say 45 years it amounts to approximately one half of the value of a portfolio (depending on returns, dividend amounts and prevailing tax rates over the period). Please be a bit more specific if you still disagree with this. You get 40% tax relief on rental income, plus you get CGT exemption. In addition to this, the money goes straight into your SIPP, sidestepping the restrictions where you are only allowed to put an amount equivalent to your salary in each year. Not sure how to quantify these benefits so I'm happy to revise my estimate to 66% better instead of twice as good. I don't see why the management fees for a property should be higher in a SIPP if anything the SIPP investment is likely to be more stable and SIPP providers, because of their size, should be able to negotiate better prices for property management than individuals. I was assuming that the gearing was the same in the BTL portfolio inside and outside the SIPP - if you believe high gearing on a property portfolio is a GOOD thing then please read some of the other topics in this forum, wouldn't want you to get hurt.
  3. Just had several conversations with a bunch of oldies, about half of them seemed to be planning to use SIPPS to buy a holiday home or a BTL for their pensions etc. I think the problem will be way bigger than you imagine. Remember, if they are getting subsidised an extra 60% of what they pay for a house it's you guys will be paying it. So however the investment works out, you lose almost as much as they do. If a houseprice crash comes then SIPPS are even more desirable - I could sell my house to my SIPP for 100K, then when the prices crash I could buy it back from my SIPP for say 25K, and pocket the 60K tax saving. It's crazy not to buy a house with your pension. Compare a 20yr old investing in shares for their pensions with one investing in housing. With shares 50% goes to the government in dividend tax, with housing they lose absolutely nothing! That's right shares would have to do twice as well as housing just to break even! BTL becomes twice as profitable as it is now. Anyone foolish enough to work for a living will find that the 60% (tax + NI + VAT) that they currently pay will go up further to pay for the SIPP bonanza. SIPPs are the way to go.
  4. I'm not sure this part is true? For example, my, um, friend is a business owner. Couldn't he leave most of the available money in the business this tax year? The following year, the business could contribute 215K to the SIPP causing the business to make a loss and enabling him to claim back the corporation tax from the previous year. So, effectively it would mean two years almost entirely tax free (except for that nasty VAT), but with the added kicker that when SIPPs start the govenment tax take actually becomes negative. Not sure about investing it in property being a good idea, but it's a great way for business owners to extract their money tax free. Maybe the real purpose of SIPPs is to destroy the small businesses the Labour party has been gunning for. There will be a huge temptation to take all the reserves out of a business while the tax rules are so favourable.
  5. Check out the smug pretend-whine from Liz Jones in the Evening Standard (who lives in a Hackney slum). "I bought my current house 10 years ago for £119,000" ... "put my house on the market for £485,000" Apparently the poor baby can't sell it at that price. Unable to make an entire lifetime's salary by doing absolutely nothing. Boo hoo. I know they only put these articles to wind us up, but this one worked on me.
  6. I agree with your comments about wage inflation (deflation in my case). But If you borrow enough you wouldn't need to work. You could fund your lifestyle by the difference between the low interest you pay on the debt and the high inflation rate. That seems to be what has happened over the past few years anyway. e.g. Borrowed 200K for a house 7 years ago. Inflation means the debt is only worth 100K in terms of original money. You have made 100K less the cost of interest payments. It's late though, so maybe this doesn't make sense.
  7. Most of the assumptions about the costs of housing seem to be based on the idea that inflation is low. Isn't it just possible that they are lying to us about inflation? If that's the case, why shouldn't you borrow all you can at 5%, spend it on any assets you like, and just wait for high inflation to wipe away your debts?
  8. Backwards again. those 53% cannot afford housing because of government controls and social housing. They currently target 50% of London housing to be kept aside for parasite scum. Honest people who actually work for a living have to pay record-breaking taxes as well as financing the "social housing" through higher prices to the builders for the remaining few properties. The solution is for the govenment to get out of the way and let the market take care of it.
  9. I think the big change is that instead of being able to put 15% or whatever it is now in your pension, from April you will be able to put in up to 225,000 in one go. People who previously had no chance of buying a flat will be able to do it easily (Necessary salary suddenly drops from 1.5 million to 225,000). If you are brave enough to buy the flat on HP then you only need 112,500 (according to gone west). >> Do you happen to have a pension fund of 150K already? No, I have hardly any, that's why the chance to put in 225,000 in one go is so darned tempting. And, yes, I am an unsophisticated investor.
  10. A lot of you seem to think that houses are around 30% - 40% overvalued. Let's assume you are correct. If I wanted a buy-to-let now costing 225,000 I would need to earn 375,000 before tax at 40%. Then I would pay more tax on all the rental income. From next year I will be able to buy the same house in a pension for 225,000 and all the rental income will be tax free. Other things being equal, this would lead to at least a 66% increase in house prices. If you are right about the 30-40% overvaluation then prices should still rise, but not by the full 66%. Worse, the current slowly increasing house prices (2%/year or whatever the Halifax said it was) could be being held back by the expectation of future bounty. (would you buy something from a shop if you new they were about to start a sale with all items 40% off?). A bit of a nightmare scenario, but house prices could be propped up by the pensions thingy. Can anyone explain why not?
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