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Debate House Prices
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Don't sell rent.
Comments
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Exactly, being a landlord is not the bed of roses it is often painted (except for the exceptionally generous tax exemptions).
I've asked this a load of times on here, but may as well ask it again. What 'exceptionally generous' tax exemptions do landlords have compared to any other person who starts up a small business?
For example, can you break it down for me for someone who sets up as a hairdresser compared to someone who sets up as a landlord? What exemptions does the landlord get that the hairdresser doesn't?0 -
my favourite bit is "While there has been some evidence that property prices are improving".
the mind boggles at what this "evidence" might be.
Sibley, though, your thread title should be more a case of, "don't sell - buy, BUY, BUY"FACT.0 -
I've asked this a load of times on here, but may as well ask it again. What 'exceptionally generous' tax exemptions do landlords have compared to any other person who starts up a small business?
For example, can you break it down for me for someone who sets up as a hairdresser compared to someone who sets up as a landlord? What exemptions does the landlord get that the hairdresser doesn't?
Well firstly, if you had bought a house 25 years ago with a 10% deposit (about £4k) it would now be worth about £165k. Even if you had to pay the maximum 28% CGT (I think it is now) that still leaves a wedge of unearned income bearing in mind that if you had the money to buy a BtL in those days you probably had your own house so you are benefiting from HPI twice. They ought to see this as unearned income and tax it higher in my view. Not sure if a hairdresser would buy his own place tbh.
Secondly, you can furnish a property quite well and cheaply up to the taxman's requirement and then 10% of your income can be discounted immediately in order to replace furniture as necessary (providing your tenants treat it well it should not be often that you need to refresh).
Thirdly, letting you count all your outgoings against your tax bill, whilst no different to your own business does mean that your mortgage interest is an allowable expense.
Basically, in times of rising prices (ie most of the time) BtL is a license to print money.
Having said that, being on call most of the time is not much fun.0 -
I've asked this a load of times on here, but may as well ask it again. What 'exceptionally generous' tax exemptions do landlords have compared to any other person who starts up a small business?
For example, can you break it down for me for someone who sets up as a hairdresser compared to someone who sets up as a landlord? What exemptions does the landlord get that the hairdresser doesn't?
I don't think there are any cleaver, it's something that owner occupiers tend to say i.e. when they are comparing their position to that of a property investors, but missing the fact that one is a business. But the fact that a LL can offset his mortgage payment against tax seems to wind them up. But as you say a hairdresser could also buy their premises and offset their mortgage payments too (although they would probably be a higher rate to pay with a commercial mortgage than the earlier BTL mortgages which have got a bit more expensive at the moment).
The 10% for wear and tear is merely an alternative for claiming actual replacement expenses/capital allowances which a hairdresser could also claim (the latter I mean).Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop0 -
Well firstly, if you had bought a house 25 years ago with a 10% deposit (about £4k) it would now be worth about £165k. Even if you had to pay the maximum 28% CGT (I think it is now) that still leaves a wedge of unearned income bearing in mind that if you had the money to buy a BtL in those days you probably had your own house so you are benefiting from HPI twice. They ought to see this as unearned income and tax it higher in my view. Not sure if a hairdresser would buy his own place tbh.
That's the choice of the hairdresser though isn't it? You choose whether to buy your business presmises or not, then you take on the risk of having bought or not bought when property prices go up or down accordingly.
So in this way, the hairdresser and the landlord are exactly the same when it comes to tax. If they both bought their property 25 years ago neither would pay anything other than the CGT owed. And although it sounds a silly argument, let's say the hairdresser bought a pair of investment scissors 25 years ago which are now worth 100% more. The tax if they choose to sell them is still CGT I believe. So the tax rules for both of these professions are the same.
The fact that the landlord has benfitted from HPI twice isn't really here or there. They could have lost out twice if house prices had fallen.Secondly, you can furnish a property quite well and cheaply up to the taxman's requirement and then 10% of your income can be discounted immediately in order to replace furniture as necessary (providing your tenants treat it well it should not be often that you need to refresh).
If you furnish a flat then the furniture will need replacing so I'm not really sure I see this as an 'exemption' from tax.Thirdly, letting you count all your outgoings against your tax bill, whilst no different to your own business does mean that your mortgage interest is an allowable expense.
This is no different from any other business is it? If I remortgage my house to set up a hairdressing salon then the loan interest can be offsetted against tax can't it?Basically, in times of rising prices (ie most of the time) BtL is a license to print money.
Indeed it can. I'm still not sure where the tax rules for landlords are any different to any other business though? I could open up a hairdressers, be very successful and say that it's a license to print money. But the tax rules would be same as a BTL pretty much.0 -
Why is it that people have no difficulty telling the difference between the words "buy" and "sell" but so many people get "let" and "rent" confused.
Sibley (who spends time on boards like this and ought to know the vocabulary by now) says "Don't sell, rent" when he clearly means "Don't sell, let". The article not only frequently says "rent" where it means "let" (which I've given up hoping for the general public not to do) but then it even says that "the tenants are required to give the property back in the same condition they let it in" when the tenants haven't let it at all - the landlord has been doing that.
It's not difficult. Letting a property means charging people to occupy a property you own. Renting means paying money to occupy a property belonging to somebody else.
Oh, and there are more restrictions on entering the property than just giving your tenants notice.
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Tyre performance in the wet deteriorates rapidly below about 3mm tread - change yours when they get dangerous, not just when they are nearly illegal (1.6mm).
Oh, and wear your seatbelt. My kids are only alive because they were wearing theirs when somebody else was driving in wet weather with worn tyres.
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That's the choice of the hairdresser though isn't it? You choose whether to buy your business presmises or not, then you take on the risk of having bought or not bought when property prices go up or down accordingly.
So in this way, the hairdresser and the landlord are exactly the same when it comes to tax. If they both bought their property 25 years ago neither would pay anything other than the CGT owed. And although it sounds a silly argument, let's say the hairdresser bought a pair of investment scissors 25 years ago which are now worth 100% more. The tax if they choose to sell them is still CGT I believe. So the tax rules for both of these professions are the same.
The fact that the landlord has benfitted from HPI twice isn't really here or there. They could have lost out twice if house prices had fallen.
If you furnish a flat then the furniture will need replacing so I'm not really sure I see this as an 'exemption' from tax.
This is no different from any other business is it? If I remortgage my house to set up a hairdressing salon then the loan interest can be offsetted against tax can't it?
Indeed it can. I'm still not sure where the tax rules for landlords are any different to any other business though? I could open up a hairdressers, be very successful and say that it's a license to print money. But the tax rules would be same as a BTL pretty much.
Well, firstly, 10% allowance is extremely generous. For the average house in the south it would equate to about £900 per year - that's already significantly more than I would pay for furniture.
Secondly, yes it is generous to hairdressers too if they can keep their equity from their second property. If I ever equate the tax system to benefiting BtLers its usually as compared to the average Joe not a small businessman (as a small businessman will usually have to put in considerably more effort than a BtL landlord so if he gets some breaks with tax then good luck to him).
Not sure if you remortgage your house to set up your business you can claim it against tax but if you can then good - these guys need a break.0 -
Well, firstly, 10% allowance is extremely generous. For the average house in the south it would equate to about £900 per year - that's already significantly more than I would pay for furniture.
Maybe I agree with you on that.Secondly, yes it is generous to hairdressers too if they can keep their equity from their second property. If I ever equate the tax system to benefiting BtLers its usually as compared to the average Joe not a small businessman (as a small businessman will usually have to put in considerably more effort than a BtL landlord so if he gets some breaks with tax then good luck to him).
This is where I start to scratch my head when it comes to people's logic around BTL on this forum. What does the amount of effort someone puts in to starting and running a business have to do with the amount of tax they should or shouldn't pay? Where do we try to apply this logic to any other business in life? Let's say two people find themselves with £50,000. One of them decides to set up a hairdressers. This involves a lot of personal hard work: training, learning a skill, finding premises, finding and managing staff, advertising, learning and doing accounts etc. etc. It's 12 hour gruelling days. The other person decides to buy a laptop and randomly invest in shares.
At the end of five years the hairdresser has made a gross profit of £80,000 but the investor has made £180,000.
Should we start to tax these people differently based on the amount of effort each one put in to starting their business? How do you do this? Do you ask them how much trouble it was to start doing what they're doing and tax accordingly? I have no idea how you'd do this.
So you can compare the BTL tax system with that of the 'average joe', but I'd compare it to any other business. We all have the same opportunities in life, we all know the tax rules and we can all set up whatever business we like.Not sure if you remortgage your house to set up your business you can claim it against tax but if you can then good - these guys need a break.
My understanding is that BTL is no different from any other business: if you remortgage a property you own and then invest that money in any business (and can prove that all the money was used for that) then you can claim tax relief on the interest you pay on that loan. So that can be a BTL, a hairdressers, buying shares or anything else.
Out of interest, why would 'these guys' need a break but BTL landlords don't? Because of the effort thing again? If I remotgaged my house to buy, for example, a racehorse would you say this is a good thing because I tax break?0 -
Maybe I agree with you on that.
This is where I start to scratch my head when it comes to people's logic around BTL on this forum. What does the amount of effort someone puts in to starting and running a business have to do with the amount of tax they should or shouldn't pay? Where do we try to apply this logic to any other business in life? Let's say two people find themselves with £50,000. One of them decides to set up a hairdressers. This involves a lot of personal hard work: training, learning a skill, finding premises, finding and managing staff, advertising, learning and doing accounts etc. etc. It's 12 hour gruelling days. The other person decides to buy a laptop and randomly invest in shares.
At the end of five years the hairdresser has made a gross profit of £80,000 but the investor has made £180,000.
Should we start to tax these people differently based on the amount of effort each one put in to starting their business? How do you do this? Do you ask them how much trouble it was to start doing what they're doing and tax accordingly? I have no idea how you'd do this.
So you can compare the BTL tax system with that of the 'average joe', but I'd compare it to any other business. We all have the same opportunities in life, we all know the tax rules and we can all set up whatever business we like.
My understanding is that BTL is no different from any other business: if you remortgage a property you own and then invest that money in any business (and can prove that all the money was used for that) then you can claim tax relief on the interest you pay on that loan. So that can be a BTL, a hairdressers, buying shares or anything else.
Out of interest, why would 'these guys' need a break but BTL landlords don't? Because of the effort thing again? If I remotgaged my house to buy, for example, a racehorse would you say this is a good thing because I tax break?
Sorry, I was concentrating on the telly. Yes, I don't really have a problem with what we get I am just trying to explain why non BtLers seem to feel aggrieved (and I have a little sympathy with them). I think anyone who puts a lot of effort into a small business does deserve a break as they are the lifeblood of this country's economy. I don't think you can deny that being responsible for a let property 24/7 is anything like as onerous as cutting hair 5 days a week.0 -
Not sure if you remortgage your house to set up your business you can claim it against tax but if you can then good
Yes you could if you can do that, but providing that you can demonstrate to the inland revenue that's definitely what the remortgage was for.
For example I remortgaged (I know this isn't about hairdressing but believe me no one would pay me to cut their hair) in 2005 and borrowed an extra 60k to extend my house. To cut a long story short I never did extend. Now if I was daft enough to think the inland revenue just believe everything you tell them I could have attempted to state that the extra 60k was the deposit, fees and refurbishment costs on a btl property that I bought in 2008 (30 months later).
If I could have done it that would have been better for me because I would be able to claim the interest as a business expense but the two events were not related.Chuck Norris can kill two stones with one birdThe only time Chuck Norris was wrong was when he thought he had made a mistakeChuck Norris puts the "laughter" in "manslaughter".I've started running again, after several injuries had forced me to stop0
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