To BTL or not to BTL, that is the question

maxxpayne

TheSpectator said:

I think OP has already convinced themselves that letting the flat is the way to go.

Think you need to go back and do some more research as to potential costs/obligations. Transferring to Ltd comes with its own complications and issues on raising funds.

Quite the opposite, especially after your clarification. However, no harm exploring assigning income to partner or looking at limited company options, as they look like viable options?

TheSpectator

maxxpayne said:

TheSpectator said:

I think OP has already convinced themselves that letting the flat is the way to go.

Think you need to go back and do some more research as to potential costs/obligations. Transferring to Ltd comes with its own complications and issues on raising funds.

Quite the opposite, especially after your clarification. However, no harm exploring assigning income to partner or looking at limited company options, as they look like viable options?

Still thinking you are focusing too much on what the net income might be without seeing the bigger picture. There are way more costs associated with renting then you have accounted for.

For Ltd Your biggest issue will be getting a lender to lend to a newly incorporated company. And if they do you won't be getting the rates for an individual mortgage.

maxxpayne

TheSpectator said:

maxxpayne said:

TheSpectator said:

I think OP has already convinced themselves that letting the flat is the way to go.

Think you need to go back and do some more research as to potential costs/obligations. Transferring to Ltd comes with its own complications and issues on raising funds.

Quite the opposite, especially after your clarification. However, no harm exploring assigning income to partner or looking at limited company options, as they look like viable options?

Still thinking you are focusing too much on what the net income might be without seeing the bigger picture. There are way more costs associated with renting then you have accounted for.

For Ltd Your biggest issue will be getting a lender to lend to a newly incorporated company. And if they do you won't be getting the rates for an individual mortgage.

So looks like assigning the income to my partner is the way to go if we go down this route.

TheSpectator

maxxpayne said:

TheSpectator said:

maxxpayne said:

TheSpectator said:

I think OP has already convinced themselves that letting the flat is the way to go.

Think you need to go back and do some more research as to potential costs/obligations. Transferring to Ltd comes with its own complications and issues on raising funds.

Quite the opposite, especially after your clarification. However, no harm exploring assigning income to partner or looking at limited company options, as they look like viable options?

Still thinking you are focusing too much on what the net income might be without seeing the bigger picture. There are way more costs associated with renting then you have accounted for.

For Ltd Your biggest issue will be getting a lender to lend to a newly incorporated company. And if they do you won't be getting the rates for an individual mortgage.

So looks like assigning the income to my partner is the way to go if we go down this route.

Again, not as easy as it sounds if she doesn't own the property or has no beneficial interest.

maxxpayne

TheSpectator said:

maxxpayne said:

TheSpectator said:

maxxpayne said:

TheSpectator said:

I think OP has already convinced themselves that letting the flat is the way to go.

Think you need to go back and do some more research as to potential costs/obligations. Transferring to Ltd comes with its own complications and issues on raising funds.

Quite the opposite, especially after your clarification. However, no harm exploring assigning income to partner or looking at limited company options, as they look like viable options?

Still thinking you are focusing too much on what the net income might be without seeing the bigger picture. There are way more costs associated with renting then you have accounted for.

For Ltd Your biggest issue will be getting a lender to lend to a newly incorporated company. And if they do you won't be getting the rates for an individual mortgage.

So looks like assigning the income to my partner is the way to go if we go down this route.

Again, not as easy as it sounds if she doesn't own the property or has no beneficial interest.

Ok. I've now posted this https://forums.moneysavingexpert.com/discussion/6570832/is-a-bridging-loan-the-opion-in-this-case-how-who-what-or-what-else-details-in-post

saajan_12

maxxpayne said:

TheSpectator said:

maxxpayne said:

Dazed_and_C0nfused said:

Do you fully understand the rules now regarding letting and finance costs and how they cannot be claimed as an expense?

You can probably get some tax relief (as a tax reducer) but it's not as simple as it once was.

I’m not aware of any changes. This is what I’ve assumed as a higher rate tax payer:

- I can claim basic rate relief on the interest only mortgage 
- I can include service charge, maintenance free and travel costs as expenses 

All based on guide at https://www.freeagent.com/apps/landlords-allowable-expenses-calculator/

In my case I’ll have to pay tax on 4800 net income after expenses every year. If I can transfer the income against my wife’s name I can probably end up saving even more tax?

How are you getting to £4800 net income a year from your share of £12,000?

This is how I’m doing it:

Rent: 2000x12 = 24,000
Interest: 1100x12 = 13,200 
Service charge: 230x12 = 2,760 
Insurance/maintenance: 50x12 = 600 
Income: 24000-13200-2760-600 = 7,440 
Taxable income: 7440-6000=1,440 
Tax: 1440x.45=648 
Total: 7440-648=6,792 

Ok so it’s actually 6792?

Where are you getting this -6k from? 
Also what happened to the interest only getting basic rate tax relief, not higher rate? That doesnt' seem to factor into  your calculation at all. 

I know silvercar has corrected it already but worth checking if there's other areas you're using the same assumption. 

maxxpayne

saajan_12 said:

maxxpayne said:

TheSpectator said:

maxxpayne said:

Dazed_and_C0nfused said:

Do you fully understand the rules now regarding letting and finance costs and how they cannot be claimed as an expense?

You can probably get some tax relief (as a tax reducer) but it's not as simple as it once was.

I’m not aware of any changes. This is what I’ve assumed as a higher rate tax payer:

- I can claim basic rate relief on the interest only mortgage 
- I can include service charge, maintenance free and travel costs as expenses 

All based on guide at https://www.freeagent.com/apps/landlords-allowable-expenses-calculator/

In my case I’ll have to pay tax on 4800 net income after expenses every year. If I can transfer the income against my wife’s name I can probably end up saving even more tax?

How are you getting to £4800 net income a year from your share of £12,000?

This is how I’m doing it:

Rent: 2000x12 = 24,000
Interest: 1100x12 = 13,200 
Service charge: 230x12 = 2,760 
Insurance/maintenance: 50x12 = 600 
Income: 24000-13200-2760-600 = 7,440 
Taxable income: 7440-6000=1,440 
Tax: 1440x.45=648 
Total: 7440-648=6,792 

Ok so it’s actually 6792?

Where are you getting this -6k from? 
Also what happened to the interest only getting basic rate tax relief, not higher rate? That doesnt' seem to factor into  your calculation at all. 

I know silvercar has corrected it already but worth checking if there's other areas you're using the same assumption. 

I think we've ruled out BTL for now. The hassle is simply not worth the cost.