BTL doesnt stack up? (sanity check request)

The_Lambchop

Thanks for clarifying. Regarding tax deductibles, if the BTL is bought in a partnership, say 70/30, are the tax deductibles applied at the same ratio? My partner pays higher-rate tax, however I'm well below the thresh-hold for paying tax. Ideally the deductibles would be applied to his tax entirely. I can see on the .Gov website info confirming what Wesleyad has said, but I can't find anything stating which partner the tax deductibles must be applied to.

wesleyad

The_Lambchop wrote: »

Thanks for clarifying. Regarding tax deductibles, if the BTL is bought in a partnership, say 70/30, are the tax deductibles applied at the same ratio? My partner pays higher-rate tax, however I'm well below the thresh-hold for paying tax. Ideally the deductibles would be applied to his tax entirely. I can see on the .Gov website info confirming what Wesleyad has said, but I can't find anything stating which partner the tax deductibles must be applied to.

Yes the deductibles are in the same ratio. No you can't do what you are wishing unfortunately (unless you change the split of the house via a deed of trust)

00ec25

The_Lambchop wrote: »

Thanks for clarifying. Regarding tax deductibles, if the BTL is bought in a partnership, say 70/30, are the tax deductibles applied at the same ratio? My partner pays higher-rate tax, however I'm well below the thresh-hold for paying tax. Ideally the deductibles would be applied to his tax entirely. I can see on the .Gov website info confirming what Wesleyad has said, but I can't find anything stating which partner the tax deductibles must be applied to.

what do you mean by "partnership"
be very careful with use of words when talking about tax.
partnership is a very specific entity whose taxation is different to what you may be thinking of


it is also very difficult to genuinely have residential property taxed as a partnership


I suspect you have missed the big picture...
are you married or merely living together or merely joint owning with another person you don't live with? It matters for tax


you are taxed as individuals, not as partners. How you split the income depends on the answer to the question above


once you split the income, all your expenses must also follow that split . technically it is called beneficial interest, you have a financial interest in the property, everything flows from that interest

SmashedAvacado

the 1.7 % is an initial yield, and it implies no capital growth or rental growth. Property works as an investment if you factor in say 3% rental / capital growth per year. Your IRR on that basis will look more healthy. Your 56 will grow to 59 after year 1. The leverage makes the capital growth the main play.

Robwales

Thanks for all the kind responses


Yes - the 1.7% versus Marcus 1.5% was my original point...it feels like a lot of effort/risk for little reward
However I appreciate that the capital itself might increase to go beyond this with house price increase - albeit this is not the SE so houses are modestly changing (up/down)


im going to do some more digging and look at any other investment vehicles with an FSA


PS
did I read somewhere about some sort of property crowdfunding or investment - I will have to read back in the answers given

bubbleupagus

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