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Buy To Let Landlords And Tax Relief On Loan Interest

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Buy to let landlords and tax relief on loan interest

Source: Macfarlanes LLP - Investors in buy to let property may be able to claim additional tax relief on mortgage interest following a change in HMRC's interpretation of the rules for deductible business expenses in relation to rental income. Investors who remortgage and take out a larger loan should in the future be able to claim tax relief on the additional interest.

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In other words a 40% tax paying BTL landlord can remortgage the slave boxe(s) and use the money for fast cars and whores (or whatever takes their fancy). An owner occupier wanting a roof over thei head gets f*** all.

Sooner or later there WILL be revolution

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what I meant to say (before anyone picks me up on it), is that the BTL landlord can get up to 40%, (50% from next year) off the interest for ANYTHING. HALF PRICE LOANS

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and having reflected on the whole thing I think I am the victim of a wind up. Even Labour would not be this right wing.

There's nothing particularly right-wing about this. It's fairly standard across most of the developed world that businesses get taxed on profit not revenue ie they can deduct their expenses including debt interest. If this were changed, debt finance would be unaffordable meaning the only people able to make money, in any business requiring capital, would be the already rich - now that would be right-wing.

Home owners do get the same tax break it's just less obvious. If you own your house then you do not get taxed on the benefit of living there rent free. Whereas, if you choose to rent, then you do have to pay tax on the income that you use to pay the rent.

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Home owners do get the same tax break it's just less obvious. If you own your house then you do not get taxed on the benefit of living there rent free. Whereas, if you choose to rent, then you do have to pay tax on the income that you use to pay the rent.

I don't understand what you mean by this. Homeowners pay any mortgage from already taxed income and can't offset their mortgage against this. Landlords can.

If there is no mortgage then the landlord will pay tax on the rental income less any other deductions such as insurance and repairs.

Please explain.

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All I'm saying is, that in virtually any other situation where you receive a benefit, cash or otherwise, (ie you put money in a savings account, you invest in shares or your employer gives you free medical insurance etc) you always pay income tax on the value of the benefit. Apart from ISA's, owning your own home is virtually the only way to get the benefit from an investment without paying any tax on the value of that benefit.

A landlord, on the other hand, would pay tax on the rent they receive from letting that same property. And rightly so, they should pay tax on the profit they make, which is in fact what happens. Basing the tax they pay on their revenue pre expenses is completely arbitrary and I don't think the people suggesting this should happen have really thought about it. There's no great tax break for landlords here.

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and having reflected on the whole thing I think I am the victim of a wind up. Even Labour would not be this right wing.

Getting back to the point, there is nothing significant here. The rules are still essentially the same as they were, in that any expenses need to be wholly and exclusively for the rental business. You can't use equity withdrawal to buy a Ferrari and then claim a tax deduction!

The original poster is just a BTL mortgage broker or something- typical VI stuff

The note referred to is quite old now. Link

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All I'm saying is, that in virtually any other situation where you receive a benefit, cash or otherwise, (ie you put money in a savings account, you invest in shares or your employer gives you free medical insurance etc) you always pay income tax on the value of the benefit. Apart from ISA's, owning your own home is virtually the only way to get the benefit from an investment without paying any tax on the value of that benefit.

A landlord, on the other hand, would pay tax on the rent they receive from letting that same property. And rightly so, they should pay tax on the profit they make, which is in fact what happens. Basing the tax they pay on their revenue pre expenses is completely arbitrary and I don't think the people suggesting this should happen have really thought about it. There's no great tax break for landlords here.

Right I see what you mean now. You are referring to the lack of taxation (i.e income tax or capital gains tax) on any increase in value of the home that you live in. Not that generous really when we used to get MIRAS.

I agree that if landlords couldn't offset their expenses then the majority wouldn't buy to let. I think the argument on here seems to be that BTL landlords have stopped many first time buyers from buying and have helped to inflate house prices.

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Right I see what you mean now. You are referring to the lack of taxation (i.e income tax or capital gains tax) on any increase in value of the home that you live in. Not that generous really when we used to get MIRAS.

I agree that if landlords couldn't offset their expenses then the majority wouldn't buy to let. I think the argument on here seems to be that BTL landlords have stopped many first time buyers from buying and have helped to inflate house prices.

No, I'm not referring to Capital Gains tax but anyway... perhaps this is too abstract.

MIRAS really was outrageous. The bigger the house you buy for yourself, the less income tax you have to pay! What a bizarre thing for the government to subsidise.

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No, I'm not referring to Capital Gains tax but anyway... perhaps this is too abstract.

MIRAS really was outrageous. The bigger the house you buy for yourself, the less income tax you have to pay! What a bizarre thing for the government to subsidise.

MIRAS was capped on interest up to £30K in my experience. not unlimited.

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No, I'm not referring to Capital Gains tax but anyway... perhaps this is too abstract.

MIRAS really was outrageous. The bigger the house you buy for yourself, the less income tax you have to pay! What a bizarre thing for the government to subsidise.

At least it was fair in the sense that it was equally available to everyone. Not like the pot-luck subsidies you get with "social housing".

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No, I'm not referring to Capital Gains tax but anyway... perhaps this is too abstract.

MIRAS really was outrageous. The bigger the house you buy for yourself, the less income tax you have to pay! What a bizarre thing for the government to subsidise.

Oh well never mind.

To be fair it was introduced in the late 60's when the Government wanted to encourage home ownership. As usual they took it too far and allowed couples to have £60000 and then I seem to remember them withdrawing it and house prices going up!!!

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