BTL should attract VAT

Graham_Devon

chewmylegoff wrote: »

Great idea graham. I'm sure the tenants won't mind paying 20% VAT on top of their rent.

This suggests that all BTL landlords would become VAT registered. And that rent would be legally VAT chargeable.

That's not the case...is it.

nollag2006

Another hair brained idea from Devon - increase rents 20%, so small landlords can pocket the price rise.

Yup - I can see the Housing Minister resigning within minutes of that ridiculous idea

Graham_Devon

nollag2006 wrote: »

Another hair brained idea from Devon - increase rents 20%, so small landlords can pocket the price rise.

Whether the VAT discussion is do-able or not, this shows the utter contempt you have for existing landlords.

Why would landlords suddenly all put their rent up by 20% because VAT is now payable on a new purchase? Existing landlords wouldn't be effected by it. So why would they ramp up the rent?

This would be (though it's already been explained why it wouldn't be functional) for new landlords, and it would possibly put them off altogether.

The build to let programmes could then take place, and BTL landlords could buy those, leaving homes to people looking for homes.

It's all airy fairy stuff, I;ve said that from the start, but just for discussion really. But your point just raises the utter contempt you have for landlords and you instantly assume all are greedy

Rent would simply be VAT exempt. You are just looking for a quick way to bat down the argument. It's an easy argument to bat down anyway, as Mac did....

Loopgames

As a self employed person and vat registered i would add that the only people this will effect are the tennants.

You see even if you earn less than the threshold you can still volunteer to vat register yourself and effectively collect tax for the government and also claim back any vat you purchase. So no, it wouldn't work.

It will however put ignorant landlords off who don't realise how easy it is to vat register yourself and create an account with hmrc.

chewmylegoff

Graham_Devon wrote: »

This suggests that all BTL landlords would become VAT registered. And that rent would be legally VAT chargeable.

That's not the case...is it.

I expect they would want to register for VAT so they could reclaim the VAT they paid when they bought the house. VAT is a tax on the consumer.

Graham_Devon

chewmylegoff wrote: »

I expect they would want to register for VAT so they could reclaim the VAT they paid when they bought the house. VAT is a tax on the consumer.

My understanding is that if you reclaim the VAT on what you bought, it becomes an isue when you sell that item? As I say, I'm no accountant - just seeing things being said which don't ring completely true from other business experience.

Mates going through it with a work van he bought and claimed the VAT back on. Don't know the in's and outs, but he now owes the taxman as he's sold the van....wound up the business actually.

Loopgames

Graham_Devon wrote: »

My understanding is that if you reclaim the VAT on what you bought, it becomes an isue when you sell that item?

Mates going through it with a work van he bought and claimed the VAT back on. Don't know the in's and outs, but he now owes the taxman as he's sold the van....wound up the business actually.

But then when the landlords sell their property, they will only make it available to other landlords who are vat regisTered, unless the general public dont mind paying market rate plus 20%. This alienates more first time buYers because the properties available to them decreases.

It is a good brainstorm but it wouldn't do what is intended. The free market dictates the order of things ultimately not social well intented concepts that are forced on people.

FTBFun

antrobus wrote: »

If you wanted to wash out those kind of 'amateurs' the easiest thing to do would be to change the law so that interest paid was no longer an allowable expense for tax purposes.

So I guess you would disallow interest expense for all business financing?

Or are we back to "BTL is not a business" blah blah blah.

chewmylegoff

Yeah that's right. So when they sell the house it will make the house 20% more expensive for someone to buy unless they are a VAT registered BTL - another interesting consequence...

Graham_Devon

Loopgames wrote: »

But then when the landlords sell their property, they will only make it available to other landlords who are vat regisTered, unless the general public dont mind paying market rate plus 20%. This alienates more first time buYers because the properties available to them decreases.

It is a good brainstorm but it wouldn't do what is intended. The free market dictates the order of things ultimately not social well intented concepts that are forced on people.

OK, so if that's the case, anyone entering into BTL, would have to also get into the VAT game...

Would that it'self not achieve some of the point that was being made? It's an extra burden. At the moment there are no extra burdens on a BTL landlord compared to a general household looking to buy a home. Infact the mortgages are easier to achieve for the BTL landlord, leading to landlord issues which my cousin is sick of being associated with.....as I'm sure many professional landlords are, after seeing their names dragged through the media articles.

It's not going to happen, but I imagine in such a scenario, rents would be rated at 0%, or 5% maximum (dependant on EU laws), so I don't see the 20% rise in rents being a huge issue TBH.

Theres probably much much better ways to achieve the same outcome however.