how does the budegt affect BTL?

Tassotti

This will never come to fruition.

Too many MPs are LLs.

It's scaremongering.

Lots of bigger LLs have panicked and sold up creating millions in SDLT and CGT.

Don't panic just yet.....

ognum

booksurr wrote: »

rental income is not self employment so why do you think this poster has to do a payment on account????

and your evidence for your scaremongering rubbish is what?

I have rental income, and HMRC have always requested payment on account, I pay half this years totally tax on account for next year.

Innys1

booksurr wrote: »

rental income is not self employment so why do you think this poster has to do a payment on account????

and your evidence for your scaremongering rubbish is what?

Because most rent is paid gross of tax - mine certainly is and I've been paying on account for over 10 years.

It's not only the self employed who pay on account:

https://www.gov.uk/understand-self-assessment-bill/payments-on-account

I'm surprised you were unaware.

Brighty

People with rental income only need to start making payments on account once their tax bill hits £1000. I didn't know about it and it caught me by surprise the first and only time my bill was over £1000 and they suddenly demanded i pay my usual yearly payment plus half of next year. Therefore not relevant to tomcat, but he'll be close once the new landlord tax kicks in

Handy calculator here to show how it will affect you

https://www.rla.org.uk/taxcentre/tax-calculator.shtml

But using his numbers, the way it will be worked out is

Total profit: 4800-100-576 = £4124
Taxed at 40% = £1649.6
Minus 20% relief on mortgage interest: 20% of 3600 = £720
Therefore total tax to pay: 1649.6-720 = £929.60

Brighty

tomcat_

thanks for that Brighty, really helpful.

At the moment paying tax over £1000 and prepayment of half of that for following year is the least of my worries, as it looks like by 2020 i will be paying 930 tax and making 524 profit assuming i have no maintenance that year..!!

That means i have to be out of pocket by approx £400 every year..!

ognum

tomcat_ wrote: »

thanks for that Brighty, really helpful.

At the moment paying tax over £1000 and prepayment of half of that for following year is the least of my worries, as it looks like by 2020 i will be paying 930 tax and making 524 profit assuming i have no maintenance that year..!!

That means i have to be out of pocket by approx £400 every year..!

I guess by then rents will have risen and you may be able to renegotiate your mortgage.

rtidrtid

coming back to this BTL Tax Relief, i've been thinking of possible ways around this.

Am i missing something, or if the way around this to try and reduce the mortgage on BTL properties?

i have a couple of properties which have mortgages of approx £100k and £80k respectively. I could bring those down over the next few years to reduce the reliability on Tax Relief. I'm going to get taxed anyway on rental income so that won't change...

welcome view on this from those more savvy than i!

_CC_

rtidrtid wrote: »

coming back to this BTL Tax Relief, i've been thinking of possible ways around this.

Am i missing something, or if the way around this to try and reduce the mortgage on BTL properties?

i have a couple of properties which have mortgages of approx £100k and £80k respectively. I could bring those down over the next few years to reduce the reliability on Tax Relief. I'm going to get taxed anyway on rental income so that won't change...

welcome view on this from those more savvy than i!

Without any leverage, I can't see the attraction of holding BTLs - what sort of yield are you getting on them?

Given you'll probably be paying CGT upon any sale, taxed on the rental income, and may have to start paying much higher stamp duty if you move home, can you really not find a more attractive investment?

rtidrtid

currently on a 8% yield, so its pretty good.


I am sure there are plenty of other ways to invest - but whilst I have the properties i'd rather see what options I have for keeping them!

mlz1413

_CC_ wrote: »

Without any leverage, I can't see the attraction of holding BTLs - what sort of yield are you getting on them?

Given you'll probably be paying CGT upon any sale, taxed on the rental income, and may have to start paying much higher stamp duty if you move home, can you really not find a more attractive investment?

What if you don't intend to sell.
Your current rent is paying a bit more than the mortgage / bills, the surplus is re-invested so the property is kept in good order, so no tax payable (pre autumn budget)
Intention is to keep the property and use it as a income on retirement.

Many seem to forget that the government wanted BTL investment and 10 years ago it was a much better bet than pouring money into a pension when annuities were plummeting.

I'm with rtidrtid pay down what you can off the mortgage before 2017.