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Jimmy2Times

Mortgage Industry Reacts Angrily ...

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http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=151515

The mortgage industry has reacted angrily to the Institute of Directors' call to scrap the buy-to-let tax break.

But Property for Life managing director David Austin warns that the if the BTL tax break is removed the damage of landlords leaving the private rented sector would affect the wider community.

He says: “The private rented sector is an essential part of the property market, fulfilling the high and increasing demand for rented accommodation and taking up the slack on social housing, ensuring that those who cannot afford to buy have somewhere to live.

I have a question for David Austin, why should the tax payer fund BTL spectualtors twice, once for the tax break on borrower interest and then again for the premium paid for houses due to speculators driving prices up.

If he for one minute believe BTL is somehow providing a service then his is sadly deluded.

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.....and taking up the slack on social housing, ensuring that those who cannot afford to buy have somewhere to live.

WTF! And just where are these flats and houses costing £80 or £90 a week, because that's the going rate for Social Housing around London.

Talking out his effing @rse.

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BTL is, to arguable extents, both a business and an investment in an asset for capital gains.

The question is whether it should be taxed like a business or like an investment, because the rules are distinctly different.

In terms of fairness, I have no problem with it keeping its current business tax status (more favourable), because I do think a good case can be made that it resembles a business more than an investment.

In terms of self-interest, as a renter, I don't know whether a change in the law would be to my benefit or not. It would probably precipitate or hasten an HPC but I'd also probably get chucked out of my house in the meantime.

It's not a black and white issue.

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http://www.moneymarketing.co.uk/cgi-bin/item.cgi?id=151515

I have a question for David Austin, why should the tax payer fund BTL spectualtors twice, once for the tax break on borrower interest and then again for the premium paid for houses due to speculators driving prices up.

If he for one minute believe BTL is somehow providing a service then his is sadly deluded.

I think it was up to a point, but that point is well and truly in the far past now.

As I understand it, if you are a BTL landlord, there is a valid business expense to offset the interest and any wear and tear against the income.

I actually think that is fair. Your income is not the amount of rent you receive, it is rent less expenses.

If you run a shop for instance, the Revenue doesn't tax you on the amount of money you take in (excluding VAT, which is a different case), it taxes you on your profit.

However, you should also pay Capital Gains tax on any increase in value of the property, which under current law is at the point where that gain is realised. In addition, I believe the revenue can claim that the CGT rules do not apply where an activity is your main source of income, in which case it would be taxed as income as well.

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I think it was up to a point, but that point is well and truly in the far past now.

As I understand it, if you are a BTL landlord, there is a valid business expense to offset the interest and any wear and tear against the income.

I actually think that is fair. Your income is not the amount of rent you receive, it is rent less expenses.

If you run a shop for instance, the Revenue doesn't tax you on the amount of money you take in (excluding VAT, which is a different case), it taxes you on your profit.

However, you should also pay Capital Gains tax on any increase in value of the property, which under current law is at the point where that gain is realised. In addition, I believe the revenue can claim that the CGT rules do not apply where an activity is your main source of income, in which case it would be taxed as income as well.

We've done this loads of times before

if they want the business benefit they should be forced to run a proper business, produce annual accounts etc. That would also help ensure against tax avoidance and bad practice

otherwise they are private investors and shouldnt get the tax break. Try borrowing 20k to buy shares and asking the Revenue if you can offset the interest against dividends before paying tax, especially if you have bought on margin

the error many people make is to compare btl with oo. They are different things and the argument is lost. Also remember that most btls are also oos too so already have any supposed oo tax break.

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