HPC thread of the week

chucknorris

mwpt wrote: »

Yes, that is fair.

In that case, in the example I gave, you might substitute investing in stocks with investing in BTL for similar returns.

When the base gets to around 2.25% I'll be selling 2 or 3 properties and moving the equity into shares, I will retain some property for portfolio diversity. But shares offer some definite advantages:

1. A tax free £5k (although I already earn more than £5k of dividend income).
2. They are taxed at a lower rate than property (after the £5k, 7.5%, 32.5% and 37.5% instead of 20%, 40% and 45%).
3. No work is required.
4. Far more liquid.
5. Much easier to avoid (not evade) capital gains tax.

Edit: If I didn't have low margin tracker mortgages I would have already sold

Crashy_Time

mwpt wrote: »

I'm point out workable alternatives that might suit certain people and why the "plan" above might not be as ludicrous as people on autopilot think.

Why wouldn't someone buy... Maybe they think property is overvalued, maybe they prefer liquidity, whatever.



But not the other way round, right? Can't lose with bricks and mortar.



Is there any case you'd consider it not worth buying? At all?

He is obviously very deeply trapped in property and needs to big it up at every opportunity, other options just don`t exist in the mindset of someone so brainwashed I`m afraid.

Crashy_Time

chucknorris wrote: »

When the base gets to around 2.25% I'll be selling 2 or 3 properties and moving the equity into shares, I will retain some property for portfolio diversity. But shares offer some definite advantages:

1. A tax free £5k (although I already earn more than £5k of dividend income).
2. They are taxed at a lower rate than property (after the £5k, 7.5%, 32.5% and 37.5% instead of 20%, 40% and 45%).
3. No work is required.
4. Far more liquid.
5. Much easier to avoid (not evade) capital gains tax.

Edit: If I didn't have low margin tracker mortgages I would have already sold

Mild sense of urgency building at Camp Norris it seems......




:rotfl:

chucknorris

Crashy_Time wrote: »

Mild sense of urgency building at Camp Norris it seems......




:rotfl:

Not at all, this has been my position for a while, I won't sell until dividend income = rental income, and that occurs when the base rate reaches 2.25%.

Crashy_Time

chucknorris wrote: »

Not at all, this has been my position for a while, I won't sell until dividend income = rental income, and that occurs when the base rate reaches 2.25%.

Ok, wasn`t aware of you saying that before, although if you have said it that`s fine. I got the impression your plans were more about cashing in equity and having time to spend it, and you thought this could be done at a leisurely pace over the next few years (which is the point I disagree on) TBH I think many on here have been taken by surprise with the US rate rise and the UK PTB stance on BTL/2nd property, meaning some plans will be changing as we type no doubt.

chucknorris

Crashy_Time wrote: »

Ok, wasn`t aware of you saying that before, although if you have said it that`s fine. I got the impression your plans were more about cashing in equity and having time to spend it, and you thought this could be done at a leisurely pace over the next few years (which is the point I disagree on) TBH I think many on here have been taken by surprise with the US rate rise and the UK PTB stance on BTL/2nd property, meaning some plans will be changing as we type no doubt.

No the next few years is my guess as to when the base rate will reach 2.25%. I've said it a few times:

chucknorris wrote: »

If you search my posts, you will see that I myself am saying that I can't see any real term growth in London property, but I have been wrong about that before. My conclusion is that it is better for me to stay in the market until the base rate creeps over 2%. My mortgages are low margin (average 0.5% over base) trackers. Although I can only guess what happens to capital values, it is much clearer what the relevant incomes of property v equities would be, and (to a lesser extent) what the tax treatment of those incomes would be. My decision is based upon leaving the market when dividend income equals property income, so in a way, I am actually favouring equities, by deciding to sell property when they would have equal value to me. Things can change though, therefore I will continue to monitor the situation.

But of course moving into equities is also part of the plan to eventually spend it too.

Crashy_Time

chucknorris wrote: »

No the next few years is my guess as to when the base rate will reach 2.25%. I've said it a few times:



But of course moving into equities is also part of the plan to eventually spend it too.

If base rate reaches those levels there will be a lot of distressed borrowers in the UK, many late entrant BTL will be in trouble with just the tax changes alone? You will be trying to sell at the worst possible time IMO.

mwpt

It's nice to see you two so happy and almost not arguing

Perhaps it is the Christmas spirit.

Cheers

chucknorris

Crashy_Time wrote: »

If base rate reaches those levels there will be a lot of distressed borrowers in the UK, many late entrant BTL will be in trouble with just the tax changes alone? You will be trying to sell at the worst possible time IMO.

IMO it will be fine, if it isn't, I'll simply hang on to them until it is fine, there isn't any urgency to sell.

chucknorris

mwpt wrote: »

It's nice to see you two so happy and almost not arguing

Perhaps it is the Christmas spirit.

Cheers

I usually respond in kind, so if someone isn't hassling me, there isn't any reason to be unkind.