Budget 2015 Interest Tax Deduction Landords - Analysis of impact

Conrad

cells wrote: »

Thats a good yield my example was of a London home/flat where yields are lower

Using your example

£145k purchase
£102k loan
£4k interest a year
£1k other costs
£10,200 income @ 95% occupancy rate

Gives a monthly surplus before tax of £390 or £312 after 20% tax (£234 after 40% tax)

post tax changes however that goes down to £168 per month after taxes.


also what you will find is that as you buy more properties the most competitive mortgages are no longer available to you. so for example RBS is very competitive last time I checked but after 4 BTLS they wont give you any more and you need to go to the nex lender whos prices are a bit higher.


also important is the president this has set. the remaining 20% of finance cost might be removed. The government might push or regulate banks to get rid of interest only BTL mortgages etc which will hurt even higher yield properties like yours

As ever it is not possible to draw such conclusions. For example in my case each property is owned with my wife, the income thus split between us so tax hike have less impact.
My Accountant helps keep income to the minimum. Directors loan accounts being but one example of vastly reducing ones taxable income

As to mortgages being more expensive when you change this is total hogwash with respect. We already use 2 lenders and lots of lenders allow 3 or 4 Mortgages and then you find another lender with just as good rates.

Rents will increase to reflect tax increases over time and as has been said if some LLs found things unprofitable they may exit and thus there is less rental property supply which means rent prices could rise.

I've been around and seen many a scare story before, in the main LLs adapt, prices recalibrate and life goes on.

Trust me many LLs are very canny and show low incomes anyway, I've seen it many times in my business dealings with them.
Often the richer ones pay very little tax.
I had some clients like this recently, super wealthy LLs with yatchs and all sorts showing incomes of £20k

Many of my clients are referrals from Accountants, all this stuff is widespread everyday normality for many.

Thrugelmir

Conrad wrote: »

Trust me many LLs are very canny and show low incomes anyway, I've seen it many times in my business dealings with them.

It's called tax evasion. Normally people regret their choice once the HMRC put 2+2 together.