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All Over, Bar The Btl Squealing

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As has been predicted on this board for 18 months or so, Nulabia have finally decided that enough morons have entered the 'BTL game' to begin the process of taxing them till they squeak.

Gordy will be 'eliminating the tax break for landlords' by no longer allowing them to offset mortgage costs against rental income.

What this means for th ecouple of hundred thousand 'get rich quick' BTL numpties is pain, extraordinary pain.

Here's an example.

Tony Numptyson buys a house on mortgage for 200k. He can only rent it out for 10k a year, but his mortgage is 14k.

"Thats ok," says Tony, "subsidizing my tenant is a smart thing to do. It's like paying into a pension.Property only goes up, so the tenant is actually helping me buy a spare house".

Oops. Remove the tax break and whammo - Tony needs to hand over between 2.5k and 4k in tax on the rental income.

In addition to the 4k he's already subsidizing the tenant, and the 3k a year in costs he can't pass on (that pesky new boiler...)

11k a year down the tubes.

But wait! Tony 'pyramided' his 'portfolio', and has tenhouses!!!

Ouch! Better hope tony gets paid 200k a year, because his 'subsidy' costs are now going to be (4 + 4 + 3 ) x 10

£110,000

:lol::lol::lol::lol:

Game over!

>>>play again?

No fvcking thank you!

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Guest Winnie

Exactly PG. :lol:

Just posted a new topic on the theory that he will use BTL Landlords as his uber-scapegoat. It is the ONLY option left to him for when the merde is flying in a month or so.

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It would be great if you're proved right PG.

But I have to point out:

Like them or hate them, BTL landlords have borrowed money to invest in assets (houses) to provide a commercial service (giving people somewhere to live).

In any other line of business, interest payments on their loan would be tax-deductible: If they'd bought a big ice cream machine on credit, the loan payments could be offset against their income from selling ice creams when calculating their tax liability.

So, much as I disapprove of incompetent property speculation under the guise of BTL, I actually think it is correct that they should be able to claim tax relief on their mortgage payments.

Am I alone in thinking this?

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As has been predicted on this board for 18 months or so, Nulabia have finally decided that enough morons have entered the 'BTL game' to begin the process of taxing them till they squeak.

Gordy will be 'eliminating the tax break for landlords' by no longer allowing them to offset mortgage costs against rental income.

What this means for th ecouple of hundred thousand 'get rich quick' BTL numpties is pain, extraordinary pain.

Here's an example.

Tony Numptyson buys a house on mortgage for 200k. He can only rent it out for 10k a year, but his mortgage is 14k.

"Thats ok," says Tony, "subsidizing my tenant is a smart thing to do. It's like paying into a pension.Property only goes up, so the tenant is actually helping me buy a spare house".

Oops. Remove the tax break and whammo - Tony needs to hand over between 2.5k and 4k in tax on the rental income.

In addition to the 4k he's already subsidizing the tenant, and the 3k a year in costs he can't pass on (that pesky new boiler...)

11k a year down the tubes.

But wait! Tony 'pyramided' his 'portfolio', and has tenhouses!!!

Ouch! Better hope tony gets paid 200k a year, because his 'subsidy' costs are now going to be (4 + 4 + 3 ) x 10

£110,000

:lol::lol::lol::lol:

Game over!

>>>play again?

No fvcking thank you!

nice scenario PG- but will start to get excited when the governement say they are going to actually do it and not just some journo - but the fact it was the guardian does lend some value to it..........live in hope

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Will Gordon Brown abolish the tax relief on interest payments retrospectively?

I'm not so sure. There are probably more of the Great British Voting Public who would lose out and tick someone elses box then there are members of the Great British Voting Public who understand the harm this policy has caused.

It would be a vote loser rather than a vote winner and that's all that seems to count these days.

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The development of complex financial instruments and the spate of loan arrangements without traditional covenants suggest another maxim: be cautious about how much you lend, especially when you know rather little about the activities of the borrower.

Mervyn King, Bank of England

http://www.bankofengland.co.uk/publication...7/speech313.pdf

Edited by Ash4781

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The interest payments are a cost, you can offset all (or nearly all) costs against your income when running a business.

Not that I like the BTL scum, but i agree they should be able to do this.

Mind you, if you removed this as a specific, it might be OK. It would not stop the BTL brigade, it would just bring down the house prices, or push up rents.

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Will Gordon Brown abolish the tax relief on interest payments retrospectively?

I'm not so sure. There are probably more of the Great British Voting Public who would lose out and tick someone elses box then there are members of the Great British Voting Public who understand the harm this policy has caused.

It would be a vote loser rather than a vote winner and that's all that seems to count these days.

where have the governement said they are going to do this????

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It would be great if you're proved right PG.

But I have to point out:

Like them or hate them, BTL landlords have borrowed money to invest in assets (houses) to provide a commercial service (giving people somewhere to live).

In any other line of business, interest payments on their loan would be tax-deductible: ...

Am I alone in thinking this?

pretty much alone, yes. Here's why.

BTL numpties who 'subsidize' tenants aren't 'investing'. They are 'speculating'.

With borrowed money no less.

Why should gambling attract tax benefits?

If I hear a tip in a pub and borrowed money to buy shares hoping they'd go up, should I get tax relief on the interest payments of the borrowing that I can set against the (hopeful) capital appreciation?

of course not.

if you have the cash, and want to be a landlord, fair enough. but if you just fancy anenormous leveraged punt using someone else's cash that happens to be available to you because of a freak set of world economic circumstances, then ha ha ha it's all you deserve.

EDIT - downandout - the BTL brigade are now more despised than estate agents! They will make a useful scapegaot over the next few years, and a handy source of tax revenue. Gordy knows that it's tits up anyway, he just thanks his stars he's weaselled into no 10 before the smell alerted people to th efac tthat the sh1t hit the fan in Q107, and he might as well get some tax out of the crash, because it's gonna crash anyway! He's not stupid, despite what everyone thinks. Evil, yes. Stupid, no.

Edited by PropertyGuru

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pretty much alone, yes. Here's why.

BTL numpties who 'subsidize' tenants aren't 'investing'. They are 'speculating'.

With borrowed money no less.

Why should gambling attract tax benefits?

If I hear a tip in a pub and borrowed money to buy shares hoping they'd go up, should I get tax relief on the interest payments of the borrowing that I can set against the (hopeful) capital appreciation?

of course not.

if you have the cash, and want to be a landlord, fair enough. but if you just fancy anenormous leveraged punt using someone else's cash that happens to be available to you because of a freak set of world economic circumstances, then ha ha ha it's all you deserve.

PG - I agree but have they actually said they are going to tax BTL!!!

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Why should gambling attract tax benefits?

Well like I say, PG, if you are right, I won't weep for the BTL'ers!

But bringing in the question of "gambling" confuses the issue, since, inexplicably, gambling winnings are also tax free. I have no idea why this should be.

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Tony Numptyson buys a house on mortgage for 200k. He can only rent it out for 10k a year, but his mortgage is 14k.

I thought banks insisted that the rent for BTL mortgages had to cover the mortgage payments?

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Well like I say, PG, if you are right, I won't weep for the BTL'ers!

But bringing in the question of "gambling" confuses the issue, since, inexplicably, gambling winnings are also tax free. I have no idea why this should be.

gambling winnings are not strictly tax free - the tax is paid by the bookmaker and is factored into the odds you get

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gambling winnings are not strictly tax free - the tax is paid by the bookmaker and is factored into the odds you get

Well I never knew that. Feel a bit less indignant now!

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I'm fairly sure that New Labour will go for the BTL crowd, but this seems severe. I remember when Brown was talking about lifting the limit on National Insurance. It managed to rile quite a few people above the Upper Earnings Limit. When it came in it was only at 1%. Plenty of room to grow, with no horses scared.

The electoral price they will pay for the chaos caused by suddenly making BTL interest disallowable will be fearsome. There will be sudden rent demands and fire sales of houses (with accompanying evictions). No they'll boil this frog slowly. Hurting landlords is moderately popular, crippling them will be suicidal.

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How many BTLs actually run a business though - if they did they would have to employ and accountant, submit proper accounts and pay tax and NI on any income they made - there would be no chance of getting a domestic mortgage for a BTL and borrowing would always be at a higher rate

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They are tax free. You win, you don't pay tax on your profit. If that's not tax free I don't know what is.

betting tax used to levied directly at the punter upto about 2001 then GB abolished this tax and levied an extra 15% tax on the bookmakers profits instead -this coast has been passed back onto the punter ultimately through less generous odds - the bookie gets paid - the taxman gets paid - you lose. admitadely it is a lot better that the flat 9% that used to be levied on the punter - but beleive you me - you are still paying tax "Stealthily"

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It would be great if you're proved right PG.

But I have to point out:

Like them or hate them, BTL landlords have borrowed money to invest in assets (houses) to provide a commercial service (giving people somewhere to live).

In any other line of business, interest payments on their loan would be tax-deductible: If they'd bought a big ice cream machine on credit, the loan payments could be offset against their income from selling ice creams when calculating their tax liability.

So, much as I disapprove of incompetent property speculation under the guise of BTL, I actually think it is correct that they should be able to claim tax relief on their mortgage payments.

Am I alone in thinking this?

The numpty from the B&B argued this in the Guardian using the metaphor of a plumber borrowing to invest in a van.

Of cause vans aren't a limited necessity that everyone needs. If everyone wants a van then we just make more vans, so me buying a van doesn't increase the cost of you buying one, in fact if anything it reduces the cost because the dealer can bulk order and pass on some of his savings.

Housing should not be treated as a normal business investment while the building of new homes is so restricted.

Most BTLers are in fact speculative investors. I don't think I could borrow to trade in shares and offset the interest on my loan against my trading costs. Or could I?

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So, much as I disapprove of incompetent property speculation under the guise of BTL, I actually think it is correct that they should be able to claim tax relief on their mortgage payments.

Am I alone in thinking this?

No.

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where have the governement said they are going to do this????

Sorry, when I say 'retrospectively' I mean for any changes to apply to people who BTL before said changes came into effect (if at all). Not that they would seek to claim back tax on BTL interest payments made in the past.

Although maybe that wouldn't be such a bad idea? Recover some of that equity they've built up in their properties in accordance with that cornerstone of economics - redistribution of income?

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Most BTLers are in fact speculative investors. I don't think I could borrow to trade in shares and offset the interest on my loan against my trading costs. Or could I?

I think you should be able to. You have to pay tax on dividends and any capital gain, so your costs should be deductible. It's two sides of the same coin.

As an individual, I doubt that the revenue would accept that, though, just as they wouldn't accept the cost of the suit you wear to work (no matter that you never wear it elsewhere, and that your employer insists on suits making it a genuine cost of doing business).

I believe it would be different if you were a business that happened to trade in shares.

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As has been predicted on this board for 18 months or so, Nulabia have finally decided that enough morons have entered the 'BTL game' to begin the process of taxing them till they squeak.

Gordy will be 'eliminating the tax break for landlords' by no longer allowing them to offset mortgage costs against rental income.

What this means for th ecouple of hundred thousand 'get rich quick' BTL numpties is pain, extraordinary pain.

One very easy way of side stepping that unless they've been very silly would be to restructure the ownership within a limited company and normal business tax rules would apply e.g. loan interest offsetable against tax

Wrapping the portfolio inside a LTD would also make it far easier and cheaper for HMRC identify where tax avoidance has been practised.

I thought banks insisted that the rent for BTL mortgages had to cover the mortgage payments?

On traditional BTL mortgages most will require the rent to cover the mortgage at initial rate, however lie-to-buy it on a OO mortgage and no such requirement will be imposed.

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