Jump to content
House Price Crash Forum
Sign in to follow this  
Bearfacts

Btl Makes No Sense When The Tax Man Takes His Cut.

Recommended Posts

Can any of you BTLs enlighten me ?

I know that BTL mortgage brokers have dropped their requirement that the rent covers 130% of the mortgage repayments to only 100%. Surely this just doesnt make any kind of sense, afterall not only does the landlord have to contend with void periods / repairs / insurance / but he/she also has to pay tax on the income ie rent doesnt he ? Therefore to break even would require something like 150% rent to mortgage repayments or am I missing something ?

On top of all this when they come to sell they will be hit with capital gains tax if they make any profit .. a fact which Sarah Beany's programme routinely leaves out of its calculations.

Share this post


Link to post
Share on other sites
On top of all this when they come to sell they will be hit with capital gains tax if they make any profit ..

Assuming the Inland Revenue find out... I wouldn't be surprised if a sizable fraction of amateur BTLs have no intention of telling them.

Share this post


Link to post
Share on other sites

Can any of you BTLs enlighten me ?

I know that BTL mortgage brokers have dropped their requirement that the rent covers 130% of the mortgage repayments to only 100%. Surely this just doesnt make any kind of sense, afterall not only does the landlord have to contend with void periods / repairs / insurance / but he/she also has to pay tax on the income ie rent doesnt he ? Therefore to break even would require something like 150% rent to mortgage repayments or am I missing something ?

On top of all this when they come to sell they will be hit with capital gains tax if they make any profit .. a fact which Sarah Beany's programme routinely leaves out of its calculations.

Its income after costs which include:-

letting fees,

service charges,

some repairs,

council tax while empty,

interest on loan.

The interest on loan bit is why some people total ignore the fact they need to pay off the loan. While its makes sense to avoid paying tax were possible I would personally prefer to own the properties down the line rather than simply rent them from the bank.

Share this post


Link to post
Share on other sites

Can any of you BTLs enlighten me ?

I know that BTL mortgage brokers have dropped their requirement that the rent covers 130% of the mortgage repayments to only 100%. Surely this just doesnt make any kind of sense, afterall not only does the landlord have to contend with void periods / repairs / insurance / but he/she also has to pay tax on the income ie rent doesnt he ? Therefore to break even would require something like 150% rent to mortgage repayments or am I missing something ?

Hrm, you mean they still expect to make money from the rental yield? For over two years now capital gain has been the only game in town, some BTL'er subsidise their tenants, they're just looking after their investment vehicle for them, but unlike most vehicles they never crash!!

Share this post


Link to post
Share on other sites

Assuming the Inland Revenue find out... I wouldn't be surprised if a sizable fraction of amateur BTLs have no intention of telling them.

That's why I'll be writing to the inland revenue forwarding the names and addresses of the two agents and landlords I've used recently, together with registry extracts of their properties and copies of the rental agreements and details of the bank accounts into which my rent was paid, and an invitation to contact me should they need a statement. I have no doubt the income these people have earned from me has not been disclosed. That much is obvious following nudge-nudge wink-wink conversation with these people-bloody indiscrete or what.

Edited by Baz63

Share this post


Link to post
Share on other sites

Assuming the Inland Revenue find out... I wouldn't be surprised if a sizable fraction of amateur BTLs have no intention of telling them.

You don`t have to tell them Mark they find out. That land reg place is very closely alligned with the Revenue. When you think for example how quick the dvla is in reminding you your car tax is up with what 60mil cars on the road, then it suggests that it`s not too difficult to track every house transaction. Let`s not foget most of these BTLs are bought with mortgage money and solicitors cannot handle cash deals above a few grand there is absolutely no escape other than to put he mortgage in your wife`s/partners name give her the huge deposit, she`ll get away with it once or twice claiming it as her residence...

Share this post


Link to post
Share on other sites

Can any of you BTLs enlighten me ?

I know that BTL mortgage brokers have dropped their requirement that the rent covers 130% of the mortgage repayments to only 100%. Surely this just doesnt make any kind of sense, afterall not only does the landlord have to contend with void periods / repairs / insurance / but he/she also has to pay tax on the income ie rent doesnt he ? Therefore to break even would require something like 150% rent to mortgage repayments or am I missing something ?

On top of all this when they come to sell they will be hit with capital gains tax if they make any profit .. a fact which Sarah Beany's programme routinely leaves out of its calculations.

Yes you are missing something BIG.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 302 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.