Buy to let no longer worth it?

Miss_Samantha

booksurr wrote: »

After all do you remember the withdrawal of MIRAS - it was not that long ago and now it has gone it leaves BLT grossly "unfair" in comparison. A fair tax rule would therefore be no finance costs relief at all for anyone.

Hi booksur,

I have read this many times, but this is comparing apples and oranges, and I think shows a widespread lack of familiarity with business.

BTL is a business and should be compared with other businesses. As said, the general principle is that profits are taxed and that business expenses are deducting from income to calculate profit.

All businesses (not only companies) may deduct financing costs and other expenses. I don't think that people find this situation unfair.

johnbusby

padington wrote: »

Planty time to increase the rent too.

I think that is a fallacy. Rents are in no way determined by prices; they are determined by what the market is willing to bear and most landlords will already be charging something very close to this (they are a business after all). This is evidenced by the fact that rental prices have shot up across England in recent years despite there being no discernible increase in costs.

johnbusby

Miss_Samantha wrote: »

Hi booksur,

I have read this many times, but this is comparing apples and oranges, and I think shows a widespread lack of familiarity with business.

BTL is a business and should be compared with other businesses. As said, the general principle is that profits are taxed and that business expenses are deducting from income to calculate profit.

All businesses (not only companies) may deduct financing costs and other expenses. I don't think that people find this situation unfair.

That may be fair enough but the fact of the matter is that all businesses are not treated equal and the government reserves the right to change the rules when they think a business is causing a detriment to society.

booksurr

Miss_Samantha wrote: »

Hi booksur,

I have read this many times, but this is comparing apples and oranges, and I think shows a widespread lack of familiarity with business.

BTL is a business and should be compared with other businesses. As said, the general principle is that profits are taxed and that business expenses are deducting from income to calculate profit.

All businesses (not only companies) may deduct financing costs and other expenses. I don't think that people find this situation unfair.

LOL, I am sure my clients would be delighted to know I have no familiarity with how to account for their business operations. Facts speak otherwise.

Miss_Samantha wrote: »

Nothing naive here, nor is anyone suggesting that the Government cannot set taxation rules.

However, we ought to expect sensible and fair tax rules (and law).

your original comment reads that the tax change is "unfair", it does not contextualise that as only relating to business comparisons. It read as a general whinge against unfair tax increases

what you are ignoring is that the tax system is a balancing act between what the "average" voter thinks is fair to themselves in a totally selfish way and what is good for the country (ie business). The average voter currently considers that the tax treatment of BTL businesses is grossly unfair and is distorting the housing market - of course whether the average voter actually understands the biased reportage the tabloids feed them is another matter

marksoton

The fundamental point being missed here is that whether a tax system is fair is completely subjective.

Progressive,regressive and proportional taxes affect different people in different ways.

Many people would argue ( to a point ) that higher levels of VAT are unfair. Principally because people on lower incomes tend to pay far more as a proportion of their income.

johnbusby

I think that probably stems from a lot of folk using it as a passive investment vehicle rather than actually treating it like a business. These changes will put some of them off who will likely be replaced by larger corporate landlords.

Of course this will have both positive (e.g. treating it as a business) and negative (e.g. more hard nosed with rent increases) effects on tenants.

Running_Horse

And today it just became that much more expensive.

deaston

And quite right too.

Miss_Samantha

deaston wrote: »

And quite right too.

Hi deaston,

I take that you are no longer considering BTL, then.

ognum

Clearly the new stamp duty rate on second and subsequent property ownership has no impact on current owners until they come to sell when their purchasers may be limited.

Provided the stamp duty is considered in the buisness plan then there is still a place for BTL investors. I am beginning to wonder what the not step will be.

So far the change in mortgage tax relief has no effect as I have no property mortgages. The removal of wear and tear allowance has no effect as I have always let unfurnished and never used it. The stamp duty has no effect as I am not planning on additional property purchases unless a real bargain comes up and then well it will have to be a bigger bargain!