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How To Get Out Of Buy-To-Let

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The government has sent a stark message to landlords: it stands firmly in the camp of homebuyers and has little interest in property investors or their profits.

The rate cut came into effect on 6 April: basic-rate taxpayers now pay 10% CGT, instead of 18% previously, while higher-rate taxpayers pay 20% instead of 28%. But, drawing the battle lines in the property market, Mr Osborne announced that landlords and second homeowners are excluded from the tax cut and will still pay the old higher rates on any capital gains they make when they sell a property.

Transfering to company ownership

Changing the ownership of the property may be beneficial, whether between spouses or by the use of a limited company, but there are many considerations to take into account to ensure that your overall net position can be improved.

Capital gains tax

Once an investor has sold a property, there could be CGT to pay. CGT is levied on the profit or ‘gain’ on the sale of any property that’s not your principal residence – including buy-to-let property and second homes. The gain is usually the difference between what you paid for the property and the amount you sold it for.

What to do with the money from a property sale

Those landlords who do decide to sell up will need to think about the best home for their money. Before investing, you should look at paying off any debts. This could be credit card debt or an outstanding mortgage on your main property.

Costs of selling up

Landlords who do decide to sell up will find that this comes with costs of its own. Estate agents generally charge between 1% and 3% of the agreed purchase price plus VAT as a fee for their work. Online estate agents are cheaper and normally charge fixed fees of between £400 and £1,000.

https://uk.finance.yahoo.com/news/buy-let-102448592.html

Can they really get out?

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Can they really get out?

Nope! :D

MoyaRuiz-The-Chinese-Finger-Trap-Box-2_z

We have morons making £15,000 a year in rent who can't find £8,000 to repair their 8 properties. While living in a free house and with a full time job.

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Sorry theyve missed the obvious one.

A BTL will not get rid of tenants before any solicitor will allow somone to buy the property.

These people operate on little or no cash margin, so will have to cover the mortgage for a number of months.

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Nope! :D

MoyaRuiz-The-Chinese-Finger-Trap-Box-2_z

We have morons making £15,000 a year in rent who can't find £8,000 to repair their 8 properties. While living in a free house and with a full time job.

The chap I think you are referring too only works on Sundays. Surely he could open a nail bar or cup cake shop for some extra income during the week?

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They're going to have to discover they need to sell at lower prices, to escape with any of their mad-gainz, before their BTLer competition does exactly that and gainz turns to losses and they get stuck - with their own homes needing to be sold to make the banks whole.That'

That's the simple way out. Sell. Come to your senses BTLers.

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They're going to have to discover they need to sell at lower prices, to escape with any of their mad-gainz, before their BTLer competition does exactly that and gainz turns to losses and they get stuck - with their own homes needing to be sold to make the banks whole.That'

That's the simple way out. Sell. Come to your senses BTLers.

Leveraged up the way most people bought their second and third BTLs they cannot escape.... The profit they should make to cover the capital gains was used as the deposit to the next house. Unless you extract yourself in the reverse order of the houses you bought you ain't got a pray of paying the tax man.

Oh and with the amnesty now finished and the big data mining done, HMRC now have more means of identifying people with BTLs who haven't owned up....

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CGT doesn't have to be an issue.

Don't make a gain and you don't pay tax.

Ah but what if youve fixed your mortgages and need to pay 5% penalty?

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CGT doesn't have to be an issue.

Don't make a gain and you don't pay tax.

But, but, houses double in price every seven years.

However if there was HPC and prices tanked they would lose even their own homes as the lenders attempted to stabilise their position.

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CGT doesn't have to be an issue.

Don't make a gain and you don't pay tax.

Trouble is, the BTL tactic was to remortgage existing properties to release money from any increase in property value in order to give a deposit for their next purchase. So, if they sell a property so as to not make any capitol gains, there is a good chance the money received would not cover the mortgage.

Unless carefully unwound, there could be carnage...

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Bet the market will supply a solution, such as ...

Companies will acquire the properties off the BTLers with the sitting tenants at a low price.

The shortfall between the price and the BTLers' mortgage will be lent by the acquirer to the BTLer with the sweetener that the acquirer will also provide the BTLer with a 'no-cost' guarantee they will share in, say 50%, of any increase in value of the property after five years.

The acquirer can rest easy in the knowledge there is unlikely to be any such increase and they can have their own tame surveyor do the valuation.

The BTLer gets to cling to the fantasy that HPI will bail them out, but meanwhile gets hooked paying interest to the acquirer. Poetic justice.

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Why would any company lend the shortfall to the former btler. The former btler would have no security to make it viable

Edited by eek

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Bet the market will supply a solution, such as ...

Companies will acquire the properties off the BTLers with the sitting tenants at a low price.

The shortfall between the price and the BTLers' mortgage will be lent by the acquirer to the BTLer with the sweetener that the acquirer will also provide the BTLer with a 'no-cost' guarantee they will share in, say 50%, of any increase in value of the property after five years.

The acquirer can rest easy in the knowledge there is unlikely to be any such increase and they can have their own tame surveyor do the valuation.

The BTLer gets to cling to the fantasy that HPI will bail them out, but meanwhile gets hooked paying interest to the acquirer. Poetic justice.

...basically ..that would entail the lenders cooking the books...and they should lose their licence for such antics...and jailed..... :rolleyes:

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Sorry theyve missed the obvious one.

A BTL will not get rid of tenants before any solicitor will allow somone to buy the property.

These people operate on little or no cash margin, so will have to cover the mortgage for a number of months.

This.

Friend of mine who has 6 has this issue. He wants out. I suggest he markets as each becomes vacant. He can't as MX will (may) consolidate. Plus he "can't afford to loose the equity in them" - albeit, he does realise the daftness of that last statement. Time to sell was 18 months ago when it all looked rosy. He is in NW. Ouch. We don't discuss it anymore.

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Why would any company lend the shortfall to the former btler. The former btler would have no security to make it viable

The BTLer might have their own house mortgage-free. Or as an alternative would it have to be a secured loan? Say it was £30,000, charge them 7% interest on that which the BTLer pays from their job income.

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