New LL Advice please

Paul_the_Painter

Not that I would condone avoiding tax - but if for instance the carpet fitters that were supplying the carpet for your new house, were to acidentally put your old address on the invoice..... that would be a shame wouldn't it? But at least you have an invoice for carpet at the rental address................terribly expensive carpet, takes a lot off the profits of a rental place having to replace stuff like that....

Home office
Phone calls
Mileage to see agent/check property
Gas safety certificate
Decorating
Repairs

All legitimate costs.

Could you look at getting a second mortgage at a reasonable rate on the rental property? (using money to pay down mortgage on new house)

Or would current mortgage provider up the mortgage on the rental? They won't do it at the cheap rate, but may do it at the same sort of rate as the mortgage on the new house.(i.e. £70,000 more at 6.5%, use this to pay down mortgage on new house)

I would see an IFA to see if there is any way to shift some debt from your new home to the old house.

theartfullodger

Google "How to avoid paying property tax" by Carl Bayley... You will save more than it costs you...

And beware, there are at least 7 taxes Landlords can end up paying: If you focus just on trying to reduce income tax you might find you end up paying more tax somewhere else... Read the book to find out more.

No, I'm not Carl../.

Cheers!

Lodger

neverdespairgirl

Have you got consent to let from nationwide?

Nitramak62

Yes, applied to let from 1st august this year to 31st jult 2013 to beat increase of 1.5% on existing rate (2.5%) for upto 3 years for existing registerd customers, before 1st septmber deadline. (thanks to tip off on this site :money:

neverdespairgirl wrote: »

Have you got consent to let from nationwide?

Nitramak62

Cheers carl oops sorry lodger,

Will look into that.

Keith

theartfullodger wrote: »

Google "How to avoid paying property tax" by Carl Bayley... You will save more than it costs you...

And beware, there are at least 7 taxes Landlords can end up paying: If you focus just on trying to reduce income tax you might find you end up paying more tax somewhere else... Read the book to find out more.

No, I'm not Carl../.

Cheers!

Lodger

Nitramak62

Hi,

I got my LL buildings cover off of direct line (Gaurentee to beat any other quote - but where cheaper anyway) quote was for 1908 semi detached 3 bedroom house in scotland so only valued at 170K.

Emergency LL cover covers you for unforeseen emergency's, repairs etc. I looked at homecall rainbow cover (goggle it) which supplys 365 24 cover for 1st £500 of emergancy claim, probably pointless but I alway err on the side of caution. Homeserve also do a similar but more expensive cover.

Hope this helps

macgirl wrote: »

Sorry to jump in, but I'm in a similar position to you Nitra, about to let our property as we've (almost) bought another.

Everything is in place, certificates, agent etc, but we've yet to sort the insurance.

Our IFA has quoted £29 per month for Landlord's Insurance but I don't know what this includes. What is your Emergency Landlord cover and what does it cover?

Thanks in advance

macgirl

Thanks, I went to Direct Line and got a quote for £17 per month for £2 million PL Insurance and £21 for £5 million.

Top Tips on here - cheers everyone :beer:

Nitramak62

Thats interesting, I will be leaving cooker (not fitted), carpets, curtains & supplying white goods (Fridge/Freezer & washing machine) if required.

So can I class this as furnished to claim 10% of rent for wear & tear?? (Assuming thats what you mean)

How about if I offer to maintain garden, can I claim that even if doing it myself? (Agent thinks having to maintain very large garden might put some people off)?

Gorgeous_George wrote: »

Let it furnished and 10% of the rent is tax-free. Carpets, curtains etc. should suffice (not sure if there is a minimum amount of furniture required). There are other tax breaks (home office, mileage to name but two).

GG

pawlala

white goods = unfurnished.

Adding bed/wardrobe to each bedroom, plus sofa to lounge = furnished.

Nitramak62

Hi,

Had a quick look on nationwide to see if worth re-mortaging for additional income tax relief before I let. (Not sure if this is tax evasion or all right as long as I do it before I find a tennent)

So from above:
My calcs are

Fees are
11 x 72.5 = 797.50 (10% management fee)
1 x 725/2 = 362.50 (Agent set up fee 50% of let - clyde property)
12 x 21 =252 (Directline landlord buildings insurance)
12 X 17 = 204 (homecall emergancy landlord cover)
12 x £95 = 1140 (interest on 45K mortgage @ 2.5%)

So income = 11 x 712 = 7975

fees = £2708

So profit of £5267 (50% @ 20% wife & 50% @ 40% me)

So roughly £1580 in tax to pay per year.

If I remortage for additional 70K (110K total) rate goes up to 5.58% (4.08 + additional 1.5%) from 2.5% on 45K. so interest goes from £95 to 511 a month. And new mortage interest only ammount drops from £748 - 486 A month. So additional overal cost of £150 ish a month.

(New mortage is repayment)

Given additional tax relif on £(511-95) x12 = £4992 so only end up paying £ 89.2 tax a year. (using above exemptions with new interest payments)

So saving (1580-448) / 12 = £128 a month in tax.

So looks like I would have to pay an extra £150 a month on mortgages to save £128 in tax, not even taking into account fee's. So I think (assuming my calcs are right) I should just stay as is.