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Bidin'matime

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Everything posted by Bidin'matime

  1. Same old misguided claptrap - I had 100% equity in my house so no mortage, so it was completely free to live there, was it?? Of course not - it was costing me the interest I could earn on the value of the house (known as opportunity cost). The 'value' of the house is only a made up paper figure unless you sell - then with rental yields so low, you can rent for less than the after tax interest you earn - that's what I do - our landlord paid £500k for the house (per land registry), tidied it up, then we moved in paying £1,400 per month rent - you do the maths...
  2. This is absolute b*ll*cks. If you get income from savings, you pay tax, if you have debt, you dont - debt is not a 'tax-free' way of saving - if instead of investing your money in an interesting bearing investment you put it in something that pays nothing at all (eg a current account or a home), then you pay no tax - big deal! If your home goes up in value, then sure that's tax free, but if not, it's worse than a current account. Rich people borrowing huge multiples of their income are (like so many others) just gambling on property inflation - maybe they think that they are better placed to weather a crash - another great tax saving idea...
  3. Can someone tell me how to get my PC to show clips like this properly - I get the sound okay, but the picture is in psychadelic colours. I havent loaded any particular software - it's just windows media player. I've found this problem with other videos.
  4. I'm an STR too and we too rent a more expensive house for less than the net interest on our equity (gross rental yeild = 3.36%). I think your inclusion of 'sold below market value' has scuppered your piece, because who would sell at BMV? We sold above the agents asking price - it may have gone up a bit since then, but it was market value and prices are pretty sticky in this area now - we are not at all sorry that we sold. Your poll appears to be aimed at getting data on people who have been panicked into selling (hence the addition of 'BMV') and few would admit to that, so I suspect that it is doomed to failure.
  5. Just like to add my congrats, FP. It only needs a bit of this kind of exposure to persuade people that perhaps it's not such a no-brainer to 'invest' in property. We exist in this privileged bubble of knowledge and understanding that the vast majority are excluded from by virtue of the vested interests in the mass media - the slightest chink of light getting through to them is going to be like giving a morsel of food to a starving man.
  6. The rent we pay is 3.36% of the price the landlord paid for the place earlier last year... (out of which he has to pay the agents and repairs, insurance etc..)
  7. I assume that this is sarcasm? I know it's possible that somewhere can be priced too cheap, but I wouldn’t have thought it of the one in question. There are loads of houses on the market that are over-priced. I've seen some that have sat on the market for over a year, as vendors think they can 'cash-in'. Many add to the apparent shortage of supply, as they sit empty - particularly BTLs where tenants have not renewed and the place has had a makeover and the landlord is lining it up to realise his paper profits. I read in and article on the newsblog that some owners don’t even let tenants near the place - they buy it as BTL, but don’t let it, just put it up for silly money and wait for a bigger fool to come along. I had my doubts, but mentioned this to someone (not an HPCer) today, who said he knows a BTL landlord who does just that - he puts them up to rent for a while at silly rents in the meantime, so no one moves in...
  8. I'm with Pelican on this one. Inflation is only relevant if the asset you are going to spend the money on is rising in price - otherwise it is a red herring. If house prices stay level, the money put by to buy a house will still buy the same house in a year’s time, even if a basket of bread and DVD players etc has risen in cost. If house prices fall 10%, you get 10% more house for your money, even if the cost of petrol has doubled.
  9. Point taken, but that was in the mid-nineties - having bought in mid eighties, it was probably not much different. We settled on a higher figure anyway, to include her estimates of various improvement expenditure.
  10. This is an interesting point - I had not even thought to warn clients about this - one assumes that people would realise it, although many think that they can claim the interest on the MEW loan used for private purposes, so it is certainly conceivable that they may think repayment of the loan would reduce their CGT...
  11. That's what we want to hear - anyone who still denies that this is a bubble is just stupid. And if it was so good, why did the flipper sell it? He probably bought another one and spent all his profit on this, and stands to lose it all again when the bubble bursts. Those who have sold will inevitably get stick from those who have not, while the bubble expands further, but when it goes pop, the boot will be on the other foot. Watch prices fall back to year 2000 levels...
  12. Thought it worth reproducing a post I made on the newsblog last week, as it underlines the fact that there could be tens, possibly hundreds, of thousands of borrowers who may be just one or two rate rises away from catastrophe - and the decision makers have no idea - they don't appear on anyone's radar - yet... "I’ve just dealt with the tax return for someone who has 2 let properties. She bought the first in the mid 80’s for around £30k, moved out in the mid 90’s, when she was struggling to pay the mortgage, and let it out. History tells us that this was a lucky strike, because when she was back on her feet, she bought somewhere else and kept the first house. All good so far – don’t we all wish we’d done that? But then I find out that house #1 has been remortgaged over and over and now has a mortgage of, wait for it, £144k. Part of that went as a deposit on house #2, but that too has since been remortgaged and now has little or no equity. Meanwhile, egged on by her ‘financial adviser’ she has recently moved out of #2 and bought house #3… After paying all the mortgage interest, repairs etc., there is no profit from the lettings. Her other income is about half the national average, probably insufficient to live on (although she’s single), and she seems to be supplementing this from MEWing. If anybody had taken a good look at her finances, there is no way on earth that she would have been allowed to buy house #3. When I asked her why she kept remortgaging, she told me that she has to change mortgages to get another cheap deal, otherwise she wouldn’t be able to afford the SVR(!) - she just finds it convenient to release a bit more equity as she goes… I told her I was worried about how she would cope with further interest rate rises – she’s confident that (although having never made a profit before), she will be in profit next year… And to think that she doesn’t appear on any, not any, statistics that are used to tell the state of the property market or the economy. Not yet, at least…"
  13. Reminds me of stories of the old ladies who would rob dying men on the battlefields of old, then sell the trinkets to the next lot of soldiers who came along - whether the punters are on the winning side or the losing side, there's always someone waiting to take advantage...
  14. It still means a fall in demand for property - but my guess is that most people at that level would rent - there is so much cheap rental accommodation that, once they've been through what is going to become a nightmare of selling up, they will be glad to rent for a while until the dust settles. They will be patting themsleves on the back for having got out while they could.
  15. But it's predictablity that matters, particularly when forward pricing - the very reason for using the $US in the first place was to have a stable basis for doing business. It's (one of the reasons) why hyper-inflation is so damaging to an economy - if you don't know what the sale proceeds are going to be worth by the time you receive them (whether it's in elephants or dollars), it makes price setting almost impossible.
  16. Fatso - the place for this is on the newsblog - interesting how there tends to be a different readership there than on the forum - I shall post it there.
  17. Rakno – Bobbins sounds like a bit of a nut – don’t take too much notice. Some of the other comments are rather lacking in intellectual rigour too. Your experience sounds almost identical to mine – saw the last boom and crash, reckoned the conditions looked similar so decided to sell – now renting a more expensive house for less than the net interest earned on sale proceeds. The fact is that house prices are so far out of kilter with incomes that they simply cannot continue to rise – I’ve made the same observation as yourself – someone following in my career footsteps 20 year behind me simply could not afford to buy the house I bought 20 years ago. So something’s got to give. Sure, the safe option is to stay with the house you can afford, then if prices rise, you still own the house you could and if they fall, ditto. The risk of STR is that prices run away from you and you end up having to buy a lesser house for your money. But you’ve probably felt that feeling that I had – and still have – seeing all that cash in real money in a building society account and wondering what sort of idiot takes that much cash and gambles it on a huge investment at or very near the top of the market. Once you’ve broken with the feeling of ‘security’ that owning a house gives you, ie stopped feeling insecure about not owning a house, you can look at it rationally. The biggest problem then is persuading your friends and family that you are not (a) going mad or b. suffering acute financial problems that forced you to sell… The only real risk is that the government allows inflation to take off, so incomes rise to meet prices, but under present arrangements, this would involve a loosening of the BofE targets – otherwise IRs would have to rise and that would trigger the crash. So the warning sign to look out for is a loosening of the inflation target set for the BofE. Stock markets are widely believed to be a bit ‘toppy’ currently – Fidelity’s top fund manager is predicting a bit of a weak period ahead. As for taking your money to the casino rather than a good building society – anyone who seriously gives such advice deserves to be ignored. The one thing to consider is splitting the cash up into numerous accounts with no more than £35k in each – that way if the worst happens, and one goes broke, you get almost all of it covered by the FSA scheme – above £35k you could lose it if the bank goes under. One other thought – consider going for annual interest to shift the income into a later tax year – this may save tax and it will delay the impact of any higher rate tax by a year.
  18. I can beat that - we've just put a holding deposit down on a place that the LL paid over £500k for, to rent it at £1,400 per month. Thats little more than 3% - it's less than the net interest we get on the proceeds of selling our (cheaper) house in a far less salubrious part of town... It's not a BTL, mind you - he's bought it as his home, but is going abroad for a year or so - so maybe we ought to be charging him as 'house-sitters'!
  19. Welcome aboard, to you and all recent joiners - sit back for the ride of a lifetime. Not quite sure what time it kicks off, but it's a'comin!
  20. But I bet some of my tips had you reaching for your tax manuals...
  21. Keep reading this site - you wont need too long to make up your mind - property inflation is just paper - worthless until you get it in the bank! Save tax - make sure they are in joint names with wife (if you have one) before selling. Move into one of them if you can - this gives you 3 years relief, even if you only live there very briefly (and either sell the one you now live in, or notify H M Revenue & Customs that the other has become your main residence). If you decide to hang on a bit, sell one this side of April 5th, so you use up this year's allowance (£8,800) and any spare basic rate tax band. If you have held them for nearly 3 years (or nearly 4 etc), wait for the anniversary to get the extra 5% taper relief. What am I doing?! - I usually earn good money for this advice and here I am giving it away for free!
  22. Sound advice. Welcome to the site . If you dont mind the move and the possibility of having to settle for something you perhaps wouldn’t buy, why not join us STRs (sold to rent) and look forward to a nicer house in a few years' time for no extra outlay? Renting isn’t dead money - dont forget that your equity will generate over 4% net of tax in a good building society account (eg Yorkshire building society 5.1% gross) – enough to pay the rent on a comparable place if you look around.
  23. This is correct. Furthermore, if you move back in before you sell and have not owned another property in the meantime, you also get another 3 years – if the absence was because your work took you away, you get another 4 years allowed or, if your work is (entirely) abroad, all of the period abroad counts as if you were living there. In addition, if it has been let as residential accommodation while you were not living there, it also gets a further relief, which is equivalent to doubling the Private Residence relief, or up to a maximum of £40k additional relief. As a Chartered Accountant specialising, to some extent, in tax investigations I am heartened by much of what I have read in this topic - I seem to be assured of an income stream from investigation work for many years to come! The new Stamp Duty form links the owner of the property with their National Insurance number, so it doesn’t take a genius to keep a record of who owns what property. Yes, they are thinking about promotion and pensions and they are promoted on results, so no point in coming after you after only a year or so – better to wait until there is enough back tax and penalties to make it look really good. And they can go back as far as they like – yes, 6 years at first, but 12 if they can establish negligence (you failed to complete your return) or indefinitely if they have reasonable grounds to suspect fraud (you intended to evade tax). I knew one old boy they hounded to the grave – they went back more than 30 years. They had not an ounce of sympathy that he was on his death-bed – they still kept on at him – they seemed to think that him dying was just a ploy to avoid paying! And it’s true that you are guilty until proven innocent. And it’s true that they are (mostly) unprincipled b*st*rds who will do anything to squeeze the maximum out of you they can. I had one client who had been defrauded by his previous accountant (who was unqualified), who had effectively framed him, but rather than pursue the accountant, they pursued the defrauded client who was an easier target - and they admitted as much. They were after about £18k but settled on £10k – it would have cost the client more than that to fight the case right the way through. After a couple of years of fighting the Inland Revenue, the client had lost the will to fight further to pursue the accountant himself – it was a clever fraud. As I say – plenty of work in the pipeline!
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