How does buying a 2nd home affect tax credits and benefits?

*~Zephyr~*

diymonkey wrote: »

Now what about how much money you put towards the property as a deposit??

Buy to Let mortgages usually operate on a minimum 25% loan to value, so on a £60k property, you would need to find a £15k deposit, plus extra money to cover conveyancing fees, mortgage arrangement fees etc (budget for around £1,500). You'll also need an EPC and Gas Safe certificate for the property before you can rent it out, so set aside a couple of hundred for those too.

You might get a period of grace on the council tax if you have to make repairs or refurbish the property before renting it out, but this varies from council to council, so you'll need to call yours and ask the question. Once the property is rented, your tenant is responsible for CT, unless its a HMO.

You almost certainly need to move to Self Assessment and start submitting tax returns each year to declare your rental income to HMRC. Call them as soon as you have the property rented to register.

MOST IMPORTANT: Learn all you can about the legalities of being a Landlord so that you are armed with the knowledge you'll need to run this business.

Head over to the Housing board and read all you can by a poster called G_M - he's the resident expert on being a landlord.

zagfles

Under UC which will replace tax credits in next few years, capital rules apply (there is some form of transitional protection), and unearned income reduces UC pound for pound (not tapered like in tax credits).

Have you really thought this through or have you just jumped on the "can't go wrong with property" bandwagon? Getting a BTL is a big risk if you're on a low income and have no experience.

Poppops

zagfles wrote: »

Under UC which will replace tax credits in next few years, capital rules apply (there is some form of transitional protection), and unearned income reduces UC pound for pound (not tapered like in tax credits).

Have you really thought this through or have you just jumped on the "can't go wrong with property" bandwagon? Getting a BTL is a big risk if you're on a low income and have no experience.

Absolutely.

We didn't do a buy to let but both myself and OH had our own houses. When we married he moved in with me and we thought it would be a good idea to let his house out.

If you both work full time, and aren't handy on the DIY front, it can be a nightmare.

In two short years we had a tenant do a moonlight flit when in rent arrears, taking our white goods with him, the next painted every wall in different primary colours :eek: and the last one had anger issues and used to punch through doors when he fell out with his gf. The neighbours were never off the phone.

References aren't always useful. We were lucky in the end that 2002/03 happened and house prices rocketed, so we sold up, but I can guarantee you we would have sold at a loss to get rid.

I know it works really well for some people, but you need to have the time, inclination and money to, let's say, buy a new washer or boiler when they break down.

There's definitely easier ways to make money

diymonkey

@ TattyG - Thank you, I will take a look at it, although my questions are mainly around the tax credits/tax/benefits system.

@ poppasmurf_bewdley - If you think about it, the whole tax system is based on some form of sweeteners or tax avoidance - remember mp expenses? google? starbuck?...the list goes on. I wish I was a high earner, but around where I live, the average salary is very low and it's better than being on benefits. But I totally understand your frustration.

@ Caz3121 - Yeah I never thought of that.

@ *~Zephyr~* - Thank you for the very useful information. I haven't got a property as yet, as I'm taking my time and want to make sure I know what I'm getting into.

@ zagfles and Poppops - Thank you for raising these concerns. I haven't bought anything as yet, but no harm in looking at my options. I haven't planned this overnight...in fact I've now been dwelling on my options for a good year or more! Just to clarify, both of us work part-time and although I can't knock a building down and rebuild it, I do have a lot of DIY knowledge and experience.

I have 2 choices. Sell my home and upgrade to a better property or buy a B2L as an investment for the future...still can't make my mind up.

tomtontom

Is there a reason why either/ both cannot work full time?

You are on benefits.

With regard to council tax, schemes are administered locally, and many councils charge a premium on empty properties. You would need to check the local rules.

diymonkey

Sorry, I made a mistake, I work full-time (30hrs) and missus works part-time (15hrs) - Reason is because of family/kids.

midnight_express

Where can you buy a house for£60k ?

Cheeky_Monkey

midnight_express wrote: »

Where can you buy a house for£60k ?

Ooop North :j

diymonkey

http://www.rightmove.co.uk/property-for-sale/property-31910670.html
http://www.rightmove.co.uk/property-for-sale/property-44536589.html
http://www.rightmove.co.uk/property-for-sale/property-33195060.html

Teahfc

diymonkey wrote: »

http://www.rightmove.co.uk/property-for-sale/property-31910670.html
http://www.rightmove.co.uk/property-for-sale/property-44536589.html
http://www.rightmove.co.uk/property-for-sale/property-33195060.html

Wow, why does the government and local councils put families on full benefits in these areas ? Why london when HB is so stupidly high when Halifax and many other similar towns with nice houses like that could not be utilised is beyond me ?