BTL Returns

Generali

In light of some of the discussion we've had I thought it might be interesting to look at BTL through a few lenses:

1. Yield: Annual rent divided by current property price
2. Stamp duty: how many weeks rent does it take to pay off the stamp duty at the new rate? (SDLT calculator here).
3. Net profit at a 85% and 50% LTV mortgage (and no mortgage at all?) under current rules and the new rules. (calculator here).

michaels

Isn't stamp duty simply an advance payment of CGT rather than a revenue expense?

Mortgage percentage - surely what also matters is what could be earned on the equity if depolyed elsewhere which means comparing against a different investment with a similar risk profile - what owuld such an investment be?

PasturesNew

For the house I own/am sitting in:
4.2%
50 weeks
Couldn't do the next bit as I've no idea what figures to guess at.

chucknorris

michaels wrote: »

Isn't stamp duty simply an advance payment of CGT rather than a revenue expense?

Stamp duty is a barrier to entry though, yes you can claim it back as an expense against CGT, but that is when you sell, usually many years later, it will be about 30 years in my case. Because you can't claim indexation (or similar inflation allowances), you don't really get to claim anything near the true actual cost (in real terms, when considering the time value of money).

tincans6

michaels wrote: »

Isn't stamp duty simply an advance payment of CGT rather than a revenue expense?

QUOTE]


No - if it looks, quacks and walks like a duck, its a duck.

You can only deduct the stamp duty from the sale price (like solicitors fees) in calculating potential capital gains tax.

There may be no capital gains tax to pay.

It may be 20 years before you are potentially liable to CGT.

You have no idea what the CGT rules are going to be like when you sell, history would suggest they will be different than now(an obvious next wheeze would be remove the annual CGT exemption residential property BTL in the next few years.)

chucknorris

Generali wrote: »

In light of some of the discussion we've had I thought it might be interesting to look at BTL through a few lenses:

1. Yield: Annual rent divided by current property price
2. Stamp duty: how many weeks rent does it take to pay off the stamp duty at the new rate? (SDLT calculator here).
3. Net profit at a 85% and 50% LTV mortgage (and no mortgage at all?) under current rules and the new rules. (calculator here).

Just noticed your new signature :rotfl:

Generali

chucknorris wrote: »

Just noticed your new signature :rotfl:

Cheers.

I read an interview with Mr Tyson recently which I found interesting. He claims that what he meant by that is that you have a plan for life until you lose your job or you're fighting in the Heavyweight division world championship fight and suddenly you get that sock to the jaw or you get sick or your dog dies or your missus leaves you......it certainly summed up what happened to me when I was diagnosed with cancer and then was kinda told that work didn't want to carry on employing someone that had taken a load of sick time off because they were being treated for cancer.

Far out! I was hit to the canvas and took a standing count of 8 at least. TBH I was lucky not to be counted out on my feet.

Anyhoo, that's a mile off topic.

I guess rather more on topic is what happens when that punch in the mouth is base rates of 4 or 8 or 12%. Or of course the Chancellor simply deciding to tax BTL out of existence. That would never happen of course.....ah.

purch

Generali is the only man who has people queuing up to question his signature.

I wonder what they will find wrong with it this time :eek:

purch

I can make my yield as high or as low as I choose, seeing as the current property price will be set by me.

wotsthat

Generali wrote: »

I read an interview with Mr Tyson recently which I found interesting. He claims that what he meant by that is that you have a plan for life until you lose your job or you're fighting in the Heavyweight division world championship fight and suddenly you get that sock to the jaw or you get sick or your dog dies or your missus leaves you......it certainly summed up what happened to me when I was diagnosed with cancer and then was kinda told that work didn't want to carry on employing someone that had taken a load of sick time off because they were being treated for cancer.

Battle plans don't survive first contact with the enemy (don't know who said that). Mike Tyson probably made the point better.

tincans6

wotsthat wrote: »

Battle plans don't survive first contact with the enemy (don't know who said that). Mike Tyson probably made the point better.

If my O level history is remembered correctly that quote is from a German General in the Franco-Prussian war.