New at buy to let .. help!

Turnbull2000

thriftybabe wrote: »

Sorry one other thing prices in Scotland have not fallen the way they have in England and the south. They have slowed down but I do not think there is going to be a price crash here.

Care to explain how Scotland is an exception to the norm? Seem to me you've been reading too many EA sponsored articles in the Scottish rags.

epz's post aside, Scotland is typically 12 months or so behind the trend. The bubble first developed in the South East, then rippled throughout the country with Scotland coming last. North of the border will follow England & Wales in good time.

HugoSP

meanmachine wrote: »

But will the CGT changes not bring a fresh deluge of flats onto the market in April?

Yes they probably will, ours is not likely to be one of them as we don't have to sell but would like to if the market was better.

Genuine question. I assumed it would, but as you're a BTLer, I just wonder why you even put your property on the market at this time (except to escape the nominal HIPs charge).

thanks

As we will not hit the 40% tax bracket this year or the next for that matter, the new rules actually penalise us. The loss of our 10 year taper relief (meaning that 40% of the gain is discounted from CGT) means that we actually pay more, as we would have only paid 20%, not 40% after taper relief on the gain if we exchanged before April 2008.

dolce_vita

HugoSP wrote: »

Yes they probably will, ours is not likely to be one of them as we don't have to sell but would like to if the market was better.


As we will not hit the 40% tax bracket this year or the next for that matter, the new rules actually penalise us. The loss of our 10 year taper relief (meaning that 40% of the gain is discounted from CGT) means that we actually pay more, as we would have only paid 20%, not 40% after taper relief on the gain if we exchanged before April 2008.

Is the house not your "pension", though?

thriftybabe

Turnbull fair enough if prices do fall but we are in it for the long term at least 10 years. We are mortgage free in our own home, have enough savings to cover any costs. The tenants rent will pay the mortgage. I know we will be okay! Even if we did not have a tenant in it we can still pay the mortgage with no worries!

HugoSP

dolce_vita wrote: »

Is the house not your "pension", though?

Our intention was to fiddle with our portfolio but we now have a property we would prefer not to have.

But, it's not mortgaged and we may as well make hay while the sun shines eh?

We have other BTLs that are tenanted and not causing grief at the moment, so this one may as well be left to earn some cash whilst the market is on the floor.

Treading_Water

Obviously going against the main opinion here - but - the op is going to put £20000 into a property and the rent is going to cover the mortgage and give a small return. Over the years, if they keep the property, the rent will increase and the return will therefore improve over and above any increases in mortgage. If they keep it for 22 years (assuming thats the mortgage period) they should have a property thats worth at least what they paid for it.
On the over hand if they invest the £20000, they would have to guarantee (I think, but someone will no doubt prove me wrong) 6% plus interest - possible - but they would also have to leave that money there for the full period of time untouched - how many of us could do that???
In answer to the original question - you will pay tax on the rent less the interest on the mortgage, less other expenses as previously posted.

Treading_Water

Also if you did sell at a profit there would be capital gains tax to consider - but if you had £20000 to invest over the same period - could you just let it be without being tempted to put it to better use?/

IveSeenTheLight

epz wrote: »

edinburgh has seen prices drop 5% in 3 months and that is without hips, also our economy is a lot more dependant on the public sector which is going to need cutting back

In contrast Aberdeen has risen by 35% in the last year
Remember each area is different, look at each area on their own merits

poppy10_2

A pledge has been made by Aberdeen councillors to build more houses if plans to scrap the tenants' Right to Buy scheme are carried out by the Government.

Councillor Kevin Stewart said: "We are desperate to build but, under Right to Buy, the figures just did not add up.

"It would be very difficult to justify drawing on the rents we collect to build new homes that would then quickly go into private ownership.

"However, if we can be confident new homes will stay in council ownership, we can look again."