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Si1

'buying Our Family Home Will Cost £7,500 Extra Thanks To Tax Aimed At Tycoons' - Telegraph

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http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/12139845/Buying-our-family-home-will-cost-7500-extra-thanks-to-buy-to-let-tax-aimed-at-tycoons.html

"

Now theyre looking to buy a family home together by releasing some equity from Rebeccas flat and combining this with a £25,000 contribution from Gareths parents.

They want to keep the existing flat and rent it out to cover the mortgage, but are not seeking to maximise their short-term yield."

Plus they've received 55k of BOMAD

But also

"The only way they can avoid the charge is to complete the purchase before April. That is highly unlikely: they would have to rush to find somewhere, and would be competing with landlords who are doing the same.

Rebecca said: If we dont complete before April were going to have to save up or sell the flat, which is not what I want to do at all.

It would take us a year or two years to save that kind of money, and by then the house prices will have gone up.

"The couple feel it is unfair that they are being caught up in a law designed to tackle a problem they dont believe they are a part of.

Gareth said: You can totally understand it where investors have lots of properties or slum properties, or where people are monopolising the property market to try and turn a profit."

Edited by Si1

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but they get the tax returned if they sell the flat/first home within a certain time limit period (and being like normal young people just wanting a home) - don't they?

Not only that but within that time limit they still wouldn't pay capital gains tax on the flat/first home?

Edited by billybong

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but they get the tax returned if they sell the flat/first home within a certain time limit period (and being like normal young people just wanting a home) - don't they?

Not only that but within that time limit they still wouldn't pay capital gains tax on the flat/first home?

Except:

"They want to keep the existing flat and rent it out to cover the mortgage, but are not seeking to maximise their short-term yield.

Gareth said: Were not interested in making a profit now, were just interested in 30 years time when the mortgage is paid off, having something we can have for retirement or in case of emergency."

Err, clearly in this case it's not actually a 2nd property. Err.

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As a taxpayer I will of course lend you 40% of the price interest free for a few years and my other savers and taxpayer friends will lend you the rest at a peppercorn interest rate.

Excellent. Pleased to see that doing the right thing is so well regarded. Makes getting bum-raped at public school feel worth it now.

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They're moving to a bigger house, have had some free money handed to them and they're still moaning.

I'm gutted that they're not going to be able to farm out some unfortunates to fund their pension.

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They are not just part of the problem but people like them ARE the problem.

If you are not going to live in it, sell it. Your expectation is you can parasite your way to wealth.

I think there's the kubler-ross denial stage right there.. Can't possibly be us the new law is aimed at. No siree, the govt will probably change it soon when they realise it affects us....

Then later they'll say it's a disgrace. Then they'll try to bargain their way out of it. Then they'll be depressed over it.

Edited by Si1

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"The couple feel it is unfair that they are being caught up in a law designed to tackle a problem they don't believe they are a part of.

Haha, what delusion! I agree with hotairmail, these people are the problem.

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If it's going to take them two years to save £7500 they are a) very lucky that she was gifted deposits to even be a "homeowner" in the first place. and b.) going to crash and burn very quickly if/when true value stage is hit.

A rise in LTV will knock them out as will a rise in IRs. I'd have serious reservations about them being able to maintain two properties at once also. Their jobs... Marketing and warehouse. Two of the first things to go in a downturn... Marketing budgets and stock levels.

"....by that time prices will rise..." Even if they did, oh boo hoo! Mumsy made sure that no such frustration occurred prior to last purchase. I've been there, saving hard only to watch it become worthless as prices skyrocket.

So much wrongness. The entitlement complex that has them given airtime to pretend they are somehow being persecuted unfairly. The impatience and clear delusion of thinking prices can continue magically upwards forever. The sheer recklessness of it all. Sod having them as your landlords. Clueless and skint.

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The fact alone that the properdee pundit in the Telegraph writes an article to defend these morons should be worthy of notice.

Thankfully, the readers' comments seem to align with common sense.

[ insert Cheryl Cole's 'becuz 'em werth' it" as generational slogan for effect ]

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It does come across as a 'horse has bolted measure'. On balance if it has a negative impact on house prices it can only be a good thing.

I do question how you can get gifted such large sums tax free. This all seems to be under the radar.

I must confess was looking to do something similar. No BOMAD in my story just hard graft and sacrifice.

Rent out our 3bed small family house and buy the next place. It would be a good fall back on dire straits, it would also be a little income for retirement. In my area in the SW there aren't many small family homes available to rent, so it would be of benefit to someone. An extra £10k is a proper slap to take. Corporate and serial BTL will avoid this. Osborne seems to hate aspiration of any kind.

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It does come across as a 'horse has bolted measure'. On balance if it has a negative impact on house prices it can only be a good thing.

I do question how you can get gifted such large sums tax free. This all seems to be under the radar.

I must confess was looking to do something similar. No BOMAD in my story just hard graft and sacrifice.

Rent out our 3bed small family house and buy the next place. It would be a good fall back on dire straits, it would also be a little income for retirement. In my area in the SW there aren't many small family homes available to rent, so it would be of benefit to someone. An extra £10k is a proper slap to take. Corporate and serial BTL will avoid this. Osborne seems to hate aspiration of any kind.

It's not aspiration, it's gambling on government bailouts.

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It does come across as a 'horse has bolted measure'. On balance if it has a negative impact on house prices it can only be a good thing.

I do question how you can get gifted such large sums tax free. This all seems to be under the radar.

I was going to post that taxing disposal of assets would be a governmental intrusion too far. A crossing of a rubicon. Then I remembered that as well as paying half my earnings on the way in, I also pay 20% VAT when I spend the residual amount that I'm graciously allowed to keep. Of course, if it's beer, fags, or petrol, I'll also pay another tax. And stamp duty on houses and shares. And VED if I choose to buy a car. So it would be entirely consistent for the govt to also tax my duaghter's birthday money. But wrong.

I must confess was looking to do something similar. No BOMAD in my story just hard graft and sacrifice.

Rent out our 3bed small family house and buy the next place. It would be a good fall back on dire straits, it would also be a little income for retirement. In my area in the SW there aren't many small family homes available to rent, so it would be of benefit to someone. An extra £10k is a proper slap to take. Corporate and serial BTL will avoid this. Osborne seems to hate aspiration of any kind.

Osborne's budgets have been pretty clearly in favour of work and personal capital accumulation. OTOH, they've been pretty clearly against leveraged speculation and idleness (whether benefit or dividend funded).

If you own a small family home then sell it and invest the money - it'll be an equally good "fall back in dire straits". You'll have the added benefit of healthy investment diversification - with your plan, you run the risk of being 100% invested in one asset class. >100% if there's debt involved. Diversification is the one free lunch on offer to investors - you'd be barking not to take it. OTOH, maybe you're well enough off to own two houses yet still have sufficient other investments to be well diversified.

The other benefit of selling and investing is that if the "dire straits" do arise, you can either live on the income or dip into the capital while you get back on your feet - with far less familial interruption than having to evict tenants and move into the rental. You say you're looking to using this capital as the basis for a pension - in which case definitely consider the sell-invest route. You can put the proceeds in an ISA or SIPP which makes life much easier.

All the above, of course, is true - if and only if you actually own the house. If it's mortgaged and you're looking to buy a bigger house with another mortgage then, well - that's entering a world of debt that I wouldn't recommend to anyone.

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Justthisbloke,

Some food for thought there, thanks.

You've never thought of that before? Are you from planet boomer or something?

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You've never thought of that before? Are you from planet boomer or something?

No, not really, but worth considering someone's opinion rather than immediately counter it.

I'm late 30s, does that make me a boomer?

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You've never thought of that before? Are you from planet boomer or something?

I think he's just new here (15 posts or so). And you've been here too long (22k posts !).

We forget sometimes how different the thinking is in the "real world" outside HPC. And how deep it goes.

I felt slightly guilty with my post and was ready to be accused of being either condescending or passive-aggressive (neither was intended!). I'm glad that Grizzles read it as intended. And it was nice (for the internet!) to get a reply which wasn't a riposte and fightback.

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I think he's just new here (15 posts or so). And you've been here too long (22k posts !).

We forget sometimes how different the thinking is in the "real world" outside HPC. And how deep it goes.

I felt slightly guilty with my post and was ready to be accused of being either condescending or passive-aggressive (neither was intended!). I'm glad that Grizzles read it as intended. And it was nice (for the internet!) to get a reply which wasn't a riposte and fightback.

I get wound up by the hard graft narrative when we've experienced the biggest public bailout of any private market in the history of the planet. It isn't hard graft, it's a forced transfer of wealth.

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