New taxes on BTLs - hill of beans?

Crashy_Time

kinger101 wrote: »

Yes. It gets confusing when one describes two entirely different things as tax credits. But the one invented by Brown is a complete misnomer as it's just a state benefit.

The other was originally a deduction in calculating taxable profit, but the real stinker now as Booksuur outlined is that as well as being partially disallowed, applying it below the line in which taxable income is calculated will now push some people who'd have originally been basic rate into higher rate. Not likely to be a problem in this scenario as a modest pension contribution would push it back into BR. Although we can't know that the regime would be when they retire, on current rules, one can get an effective rate of 15% if they take a 25% lump sum tax free and the remainder is taxed at basic rate.

Crashy had to push this point to get discussion on it though.....
:rotfl: It all amounts to making BTL pretty un-attractive going forward?

booksurr

Crashy_Time wrote: »

Crashy had to push this point to get discussion on it though.....
:rotfl: It all amounts to making BTL pretty un-attractive going forward?

i rather think the average reader got it the first time round, it's only crashy who needs repetitious posts

i refer you to #30 & #31 (again...)

Crashy_Time

kinger101 wrote: »

Incoherent. For one, interest rates on residential mortgages are lower. Second, taxes on residential owners are lower than landlords (normally regular SDLT, PPR CGT exemption). Third, Labour government.......:rotfl:

Why are they no longer encouraging people into BTL then?

kinger101

Crashy_Time wrote: »

Why are they no longer encouraging people into BTL then?

Who is they? The voices in your head. I don't recall anyone encouraging or discouraging me. BTW, about 40% of properties in the UK are bought without a mortgage.

getmore4less

Crashy_Time wrote: »

Why are they no longer encouraging people into BTL then?

The real issue is that BTL tend to have money for deposits owner occupiers don't.

now owner occupiers need deposits you need to balance the demand by making BTL a bit less attractive.

if lending at 100% was allowed but with more stringent affordability as a balance there would be more OO demand

There are some 100% options like Barclays springboard

You could do something like have the payments set so 10% capital paid by 2 years.

£100k mortgage @ 3% over 25years £474pm after 2y £94467

To get to £90k need a payment of £654 or the equivalent of a rate of 6.16% that's in the stress test region.

This is not far off where a 95% mortgage would get to normally

Crashy_Time

kinger101 wrote: »

Who is they? The voices in your head. I don't recall anyone encouraging or discouraging me. BTW, about 40% of properties in the UK are bought without a mortgage.

"They" is the government for allowing (encouraging?) it to happen, would have thought that was pretty obvious? People felt their pensions were under attack and BTL seemed like a substitute, and it was presented in the media as a "safe bet".

kinger101

Crashy_Time wrote: »

"They" is the government for allowing (encouraging?) it to happen, would have thought that was pretty obvious? People felt their pensions were under attack and BTL seemed like a substitute, and it was presented in the media as a "safe bet".

Allowing something to happen isn't promoting it. Taxing it isn't necessary discouraging it. The government doesn't want to stop me buying a car just because VAT is levied. Or sit on my bum all day watching Jerry Springer just because my income in taxed.

As for the media, yes, they will discuss the merits of investing in A versus B. Yes, many people did well out of BTL. But I wouldn't view it as an homogenous voice which compels me to act in any particular way. There are many people who would have had the opportunity to use BTL as a pension pot but decided not to for whatever reason.

Crashy_Time

kinger101 wrote: »

Allowing something to happen isn't promoting it. Taxing it isn't necessary discouraging it. The government doesn't want to stop me buying a car just because VAT is levied. Or sit on my bum all day watching Jerry Springer just because my income in taxed.

As for the media, yes, they will discuss the merits of investing in A versus B. Yes, many people did well out of BTL. But I wouldn't view it as an homogenous voice which compels me to act in any particular way. There are many people who would have had the opportunity to use BTL as a pension pot but decided not to for whatever reason.

So the property bubble just happened on it`s own then, no vested interests cheerleading it along.....mmm interesting perspective :rotfl:Property was the mechanism to get credit into the system, to make people feel richer when they had no wage rises etc. Of course the bankers made out like bandits and the politicians got people who "felt richer" to vote for them, but no one cared at the time, and of course it has been a disaster, not least because the PTB have been so busy trying to keep the economic plates in the air after it all went wrong that they missed the political plates shifting under their feet. The credit through property experiment has failed, the next move is big infrastructure spend and higher rates (US led) and where the big boys go the UK will follow. Very interesting times!

MissMoneypenny

Landlords need to be aware that the way this new tax works will push some landlords out of being able to claim Child Beneift.

Those landlords claiming the welfare payment Tax Credits will have to declare a higher income, meaning they will receive less Tax Credits. How someone who needs the welfare state to pay for their children can afford to carry out the repairs on their let, is another question.

kinger101

Crashy_Time wrote: »

So the property bubble just happened on it`s own then, no vested interests cheerleading it along.....mmm interesting perspective :rotfl:Property was the mechanism to get credit into the system, to make people feel richer when they had no wage rises etc. Of course the bankers made out like bandits and the politicians got people who "felt richer" to vote for them, but no one cared at the time, and of course it has been a disaster, not least because the PTB have been so busy trying to keep the economic plates in the air after it all went wrong that they missed the political plates shifting under their feet. The credit through property experiment has failed, the next move is big infrastructure spend and higher rates (US led) and where the big boys go the UK will follow. Very interesting times!

You're reading too much into it. Before the last crash, I'd say UK banks probably relaxed their lending criteria, thinking the risk of bad debt was mitigated by the chance property prices would continue to rise. I'd say Brown saw lots of stamp duty coming in, and decided against intervention in the free market. And of course, people treating their houses as collateral for consumer spending helped the treasury too. It was more accident than design.

Of course, you create your own narrative to explain why you're still in some damp bedsit at the age of 45.