Budget And B T L

[Guest]

Please can someone summarise briefly the main changes proposed in the budget that will directly affect BTL?

I know there are other threads but they're rather long!

Cheers

[Venger]

Still catching up with things myself.

Two things I do know.

Some BTLers who have been positioning to sell because of C.24 were cheering the announced CGT % reduction, and then got annoyed when they realised for residential property there is an 8% surcharge, taking the position back to same as pre-Budget.

Stamp Duty position has been clarified. Made simple. Pay more 2 home+ people.

[19 year mortgage 8itch]

But accidental landlords now have 3 years to claim back the 3% surcharge if they sell their other property leaving them with only the main residence.

(Was 18 months originally)

Edited March 17, 2016 by 24 year mortgage 8itch

[Neverwhere]

But accidental landlords now have 3 years to claim back the 3% surcharge if they sell their other property leaving them with only the main residence.

(Was 18 months originally)

But they still have to find the cash to pay it in the meantime. That's less money for their deposit on their next place, less money earning in interest for them elsewhere, and a lot of pressure to actually make a sale as the clock ticks down.

[Neverwhere]

I thought it was a pretty good Budget on the housing front:

• no exemptions at all for the 3% stamp duty surcharge for additional residential properties
• CGT reductions for pretty much everything except residential property making other investments more attractive in relative terms
• new subsidy schemes limited to ISAs rather than instantly gifted deposits, potentially drawing demand out of the market just as exiting BTLers are increasing supply
• strong indications in the FPC's Budget 2016 remit letter that the Treasury will be assigning the FPC powers of direction over BTL in the near future
• confirmation that the tax deductibility of finance costs will be limited for corporates generally, further undermining the judicial review argument

[goldbug9999]

• confirmation that the tax deductibility of finance costs will be limited for corporates generally, further undermining the judicial review argument

Indeed, JR is dead in the water now that "real businesses" can only claim a maximum of 30% of income as debt costs.

[stuckin2up2down]

But accidental landlords now have 3 years to claim back the 3% surcharge if they sell their other property leaving them with only the main residence.

(Was 18 months originally)

So they have 3 years to get down to one property even if that one property is a BTL and not their residence?

[This time]

I thought it was a pretty good Budget on the housing front:

• no exemptions at all for the 3% stamp duty surcharge for additional residential properties

So they've done away with the idea that you don't have to pay the extra 3% if you're replacing your main residence?

[Neverwhere]

So they've done away with the idea that you don't have to pay the extra 3% if you're replacing your main residence?

No, but that was never an exemption, it was always an integral part of the rule: the surcharge is specifically for acquiring additional properties, not for replacing existing ones.

[Neverwhere]

So they have 3 years to get down to one property even if that one property is a BTL and not their residence?

Not quite. They have 3 years in which, if they have bought a new main residence, they can sell their previous main residence and claim the SDLT surcharge back.

If they weren't moving main residence then it doesn't matter whether or not they then subsequently sell all of their other properties, they won't get any kind of refund at all.

Edited March 17, 2016 by Neverwhere

[Ah-so]

Indeed, JR is dead in the water now that "real businesses" can only claim a maximum of 30% of income as debt costs.

This had completely passed me by, as it has those morons at 118.

Consultation here:https://www.gov.uk/government/consultations/tax-deductibility-of-corporate-interest-expense/tax-deductibility-of-corporate-interest-expense-consultation

All those incorporating could get quite a shock when they find that they cannot deduct all their interest

[Neverwhere]

This had completely passed me by, as it has those morons at 118.

Consultation here:https://www.gov.uk/government/consultations/tax-deductibility-of-corporate-interest-expense/tax-deductibility-of-corporate-interest-expense-consultation

All those incorporating could get quite a shock when they find that they cannot deduct all their interest

I think they might have to have Fergus-style portfolios in order to get over the de minimis threshold as currently proposed, but we'll see how that turns out in the final draft. Certainly puts a massive dent in the JR argument, which was already looking fairly battered to begin with.

[stuckin2up2down]

Indeed, JR is dead in the water now that "real businesses" can only claim a maximum of 30% of income as debt costs.

Sorry will this be a new cap on BTL people? 30% of income can only be offset against debt?

[TheCountOfNowhere]

I've come up with the perfect solution.

SELL UP AND GET A F**KING JOB.

[goldbug9999]

Sorry will this be a new cap on BTL people? 30% of income can only be offset against debt?

As I understand it there will be a limit on all companies such that they can only offset debt repayments against corporation tax to a maximum of 30% of earnings (which would equate to 30% of rent for a property rental business). I dont think the the measure was specifically targeted at incorporated BTL but at large companies riding debt to an offshore holding company to minimise UK corp tax.

This also completely destroys the core thrust of the BTLers JR that its unfair to tax debt repayments as income/profit because this new rule does exactly that for "real business".

Edited March 18, 2016 by goldbug9999