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easy2012

The Proposal - Taxing Btl Using A Form Of Lvt

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The fact that BTL interests etc are tax deductible has been brought up here before. I also had the opportunity to read up some

tax rules in this area and they are pretty complicated.

The proposal here would be to tax BTL properties on a LVT like formula (e.g. 1% of the last sale price, adjusted for an index). Given a normal rental

yield of around 4%, a 25% of that would be 1% (or link this rate to base rate +x or some sort of average mortgage rate index used in SMI etc) so a competent operator (using more equity) in this area would gain, while one using more debt will suffer. This will be very simple to administer (as opposed to current rules on renewal, capital expenditure, wear and tear etc).

This may be more acceptable as well as many of the home owners (70% of the voters according to some claims?) are not affected.

Second home owner and absentee owner will pay.

Any thought on this ?

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The fact that BTL interests etc are tax deductible has been brought up here before. I also had the opportunity to read up some

tax rules in this area and they are pretty complicated.

The proposal here would be to tax BTL properties on a LVT like formula (e.g. 1% of the last sale price, adjusted for an index). Given a normal rental

yield of around 4%, a 25% of that would be 1% (or link this rate to base rate +x or some sort of average mortgage rate index used in SMI etc) so a competent operator (using more equity) in this area would gain, while one using more debt will suffer. This will be very simple to administer (as opposed to current rules on renewal, capital expenditure, wear and tear etc).

This may be more acceptable as well as many of the home owners (70% of the voters according to some claims?) are not affected.

Second home owner and absentee owner will pay.

Any thought on this ?

yes, it's nonsense.

There are some people for whom the answer to every ill in society is a tax rise. I call it Fascist Socialism. The fact is, BTL makes little sense without capital gain, so why not let the market tank as it is destined to do? Clearly any tax breaks exclusivley available to BTL are not fair, but you ought to be campaigning for the reduction of tax on the non-BTLers rather than an increase on the landlords. Although you maybe like giving the State money?

Edited by cheeznbreed

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yes, it's nonsense.

There are some people for whom the answer to every ill in society is a tax rise. I call it Fascist Socialism. The fact is, BTL makes little sense without capital gain, so why not let the market tank as it is destined to do? Clearly any tax breaks exclusivley available to BTL are not fair, but you ought to be campaigning for the reduction of tax on the non-BTLers rather than an increase on the landlords. Although you maybe like giving the State money?

LVT makes a lot of sense. If you make the tax rate progressive, it creates a barrier to renters buying everything up and exploiting monopoly possession of the land. Nothing indecent or fascist about that.

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yes, it's nonsense.

There are some people for whom the answer to every ill in society is a tax rise. I call it Fascist Socialism. The fact is, BTL makes little sense without capital gain, so why not let the market tank as it is destined to do? Clearly any tax breaks exclusivley available to BTL are not fair, but you ought to be campaigning for the reduction of tax on the non-BTLers rather than an increase on the landlords. Although you maybe like giving the State money?

I think you missed the point. I don't like bigger state or hand more money to the state. This is not a tax rise but a tax swap.

The idea is to swap the Rental income minus (a set of complex deduction), with a LVT like tax.

With the correct borrowing profile, I can construct a BTL portfolio using lots of debt with around a 2% carry profit - excluding capital gains.

So, debt powered of portfolio £1m, funding 3%, rental yield 5%, net profit 2% (or £20k ish, optimistically). At 40% tax rate, this yield £8k tax.

If the portfolio is equity powered, rental yield 4.5%, net profit £45k, tax 40% about £18k.

So, the current system encourage leverage.

My new scheme will cause the portfolio to pay about £10k of tax, and hence favouring the portfolio that uses equity, and punishes the one

that uses debt/leverage.

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You would be simply favouring the very rich over average joes just wanting an alternative to funding their pension. The rich like keeping the best investment vehicles for themselves so this would just be another one to add to the list. Nice one!

I can't think of anything tax wise where you are assessed on a form of income and not allowed the appropriate deductions to offset against it. Interest is a valid deduction

If you are running very debt heavy that is the risk for that individual to assess. I personally thought they should have kept the taper relief so encouraging you to hold the investment for a long period of time to reduce capital gain but I am in the 'it's my pension camp'

All sounds like sour grapes, mortgages were available to everyone in last ten years at very minimal deposits so buyers have not been disadvantaged vs btl

A lot of people who complain about btl on here had the oppurtunity to do it but did not have the guts to risk doing it... Coulda, shoulda, woulda....

For the volumes posted on here they could have done a bit of research, signed a few forms and had their own btl

For most doing it reading their pension projections form their schemes was enough incentive

A fatal flaw in the idea.... For a couple with plenty equity in their principal residence just mortgage that and use it to reduce the amount of debt and tax payable on the btl

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So those who buy cash pay no tax?

?????

Tax are to be levied on a percentage of the property price, rather than on income/expenses/funding... There is no chance

that a country wide LVT will be passed by the parliament, so this limited version will have a better chance of succeeding.

Under the present system, those who buy using debt pays not tax, those who buy using cash pay lots of tax.

Under the present system, non residential landlord gets a personal allowance exemption also, and hence probably pays

zero tax on rental income (this including those who works overseas and rent out current home or those who live overseas

and use UK rental income to fund their life style there).

Under the proposed system, the same amount of tax is paid, independent of funding method or accounting manoeuvres..

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You would be simply favouring the very rich over average joes just wanting an alternative to funding their pension. The rich like keeping the best investment vehicles for themselves so this would just be another one to add to the list. Nice one!

BTL = pension? House price always go up ?

Average Joe who can't afford to loose any money shouldn't really be playing the BTL game. BTL, if run, must be run as a proper business and professionally.

Plenty of amateur landlords who go bust defaulting on mortgages and caused the tenants to suffer (due to no fault on the tenant, whatsoever).

I can't think of anything tax wise where you are assessed on a form of income and not allowed the appropriate deductions to offset against it. Interest is a valid deduction

If you are running very debt heavy that is the risk for that individual to assess. I personally thought they should have kept the taper relief so encouraging you to hold the investment for a long period of time to reduce capital gain but I am in the 'it's my pension camp'

Of course, if you are taxing on income then you have to allow for the appropriate (and at times, very complex) deduction (and income re attribution - e.g. form 17).

License fees, HMO license fees are of that sort - you pay regardless whether there is an income to be set against them. Use the asset efficiently and it works

well. Try to use it in efficiently and you have to suffer the lost.

A fatal flaw in the idea.... For a couple with plenty equity in their principal residence just mortgage that and use it to reduce the amount of debt and tax payable on the btl

??? Under current system, more debt = less tax. So, a couple can either reduce debt or increase tax, or increase debt and reduce income tax...

We don't want over leveraged banks... and I see no reason of favouring over leveraged property empires...

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The fact that BTL interests etc are tax deductible has been brought up here before. I also had the opportunity to read up some

tax rules in this area and they are pretty complicated.

The proposal here would be to tax BTL properties on a LVT like formula (e.g. 1% of the last sale price, adjusted for an index). Given a normal rental

yield of around 4%, a 25% of that would be 1% (or link this rate to base rate +x or some sort of average mortgage rate index used in SMI etc) so a competent operator (using more equity) in this area would gain, while one using more debt will suffer. This will be very simple to administer (as opposed to current rules on renewal, capital expenditure, wear and tear etc).

This may be more acceptable as well as many of the home owners (70% of the voters according to some claims?) are not affected.

Second home owner and absentee owner will pay.

Any thought on this ?

In general I like it.

Not so sure about LVT as a total system, particularly how the consequences for farming etc might pan out, and also

the diminished possibility of leading a minimal "off grid" type of lifestyle and being forced into working for wages.

I certainly favour taxing attempts to glob on to others means of life.

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In general I like it.

Not so sure about LVT as a total system, particularly how the consequences for farming etc might pan out, and also

the diminished possibility of leading a minimal "off grid" type of lifestyle and being forced into working for wages.

I certainly favour taxing attempts to glob on to others means of life.

I think you could live off grid in a camper van, but if you want to own land then either use it productively (and pay LVT) or let someone else do that.

Alternatively, there might turn out to be exclusions for very small scale off gridders - I can't see HMRC accepting goods and services instead of money. Actually you might be able to pay in carbon or biodiversity credits or something like that.

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  • 298 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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