Don't FTB, BTL

Gorgeous_George

Rather than buying a house, either now or after the crash, why not get together with some friends and save some money?

Take 4 couples. Each buys a house to let out to one of the other 3 couples. Hey presto, tax relief on mortgage interest and other costs.

I'm sure the taxman will spoil the party.



GG

kingkano

Interesting theory GG

Guy_Montag

What happens when you come to sell & are charged CGT?

silvercar

Difficult to get a BTL mortgage if you don't own a property.

I hope all your couples have their deposits ready and that the mrental to mortgage ratio works out. What happens if one couple want to sell? They evict their mates?

iom_dave

unfortunately you only get relief against rental income i.e

for example:-

each pays £1000 in interest


each pays £1000 in rent

net profit in nil

tax relief = 0


Ignoring 10% wear and tear allowance etc.

No easy way round this bit of the tax system.

Gorgeous_George

Guy_Montag wrote: »

What happens when you come to sell & are charged CGT?

A couple would have £18,400 CGT allowance. Do you think prices will rise by more than that?

Take this on to a grander scale and have everybody only ever buying one house. When they need to trade up, they rent a larger house and let their own property to someone else.

Would Gordie miss all that Stamp Duty?

Perhaps it could work similar to timeshare but with people buying 52 weeks.



GG

This rain is keeping me out of the garden.

real1314

Gorgeous_George wrote: »

Rather than buying a house, either now or after the crash, why not get together with some friends and save some money?

Take 4 couples. Each buys a house to let out to one of the other 3 couples. Hey presto, tax relief on mortgage interest and other costs.

I'm sure the taxman will spoil the party.



GG

Ok, so I have a mortgage of £3.5k int + £0.5k repayment pa. I let to you at £4k pa.
You have the same mortgage and let to me.

We each have £4k income, and can off set £3.5k against tax. Tax to pay on £500. We lose money to Gordo.

Alternatively we charge each other £3.5k rent, the rent cancels out the mortgage int, no tax to pay.
What do we gain?

Generali

If GG lived in Aus or NZ where you can set BTL losses off against the rest of your tax liability, this would have some appeal. In the UK it's pointless for all the reasons described above.

There's also the whole thing about this being an obvious attempt to abuse the rules to reduce tax liability which any competant tax inspector would spot in a moment, even an Australian one.