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Mrs Bear

Small Piece In Sunday Times Saying It's Time To End Tax Breaks For Lls

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In the money section, Ian Cowie ('Financial commentator of the year') calls LL tax breaks, in particular mortgage interest relief, 'a little known anachronism' (!) .

He suggests that they could be done away with in the upcoming budget - this would help to 'take the steam out of runaway house prices'. And 'booming BTL portfolios are pricing out younger people from starter homes'.

The only pity is a) it was a small side piece to his main article, and b] George Osborne is unlikely to take the alightest notice. Though since IC quotes mortgage interest relief for LLs in 2012-2013 at £6.3 bn, you never know.

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i just posted this in an other thread. Yes I do think FTB's should have an advantage over BTL LL's

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I saw an interview with some guys at the IFS. Their view was that owner occupiers have it easier tax-wise (no CGT).

They seemed to be assuming that LL's actually paid the income tax and then CGT when they sell.

I know many landlords just don't declare it, and hope they don't get caught.

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Compromise: Keep mortgage interest relief but require that all landlords operate their properties via UK-registered limited companies and therefore declare income and tax properly. Will get rid of the "amateur landlord" bobbins as well.

Edited by mikthe20

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I saw an interview with some guys at the IFS. Their view was that owner occupiers have it easier tax-wise (no CGT).

They seemed to be assuming that LL's actually paid the income tax and then CGT when they sell.

I know many landlords just don't declare it, and hope they don't get caught.

The SA tax return asks how many rental properties you have, but AFAIK does not require addresses, so it's no wonder if LLs do not pay up. There is no way to match BTLs to any register, and I don't see how any solicitor handling the paperwork for a sale would know anyway whether it's a BTL unless the LL were to tell them.

The system simply does not cater for the large scale of BTL that we have now.

Are letting agents obliged to inform the tax man? But even if they were, the many LLs who manage their properties themselves would still fall under that radar, and the sort of slumlords who house illegals and collect rent in cash would never voluntarily comply with any legal requirement anyway.

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I would start by removing some of the CGT exemptions for owner occupiers that turn LL (and maybe "flippers" as well). Abuse of this is rampant - all you need to do is live in the house for a few weeks at the beginning, then you can rent out for a number of years (4?) and sell tax free as a primary residence. Shifting primary address to houses that are bought to renovate and then selling on with no CGT is also rife.

THe government needs to decide whether houses are "special" or just normal financial assets. If the latter, then we need to start de-privileging housing as an asset class - in particular we need to start counting housing as an asset when means testing. This latter issue is the one reason I might consider buying a place before retirement.

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'take the steam out of runaway house prices'

I like my propaganda sneaky and devious I do.

House prices here in Northants up 12% in 9 years and the government propped sub prime market has topped out again.

Hardly run away.

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