The joy of being a landlord

Bald-Eagle22 said:
100% - Anyone who deals as sole trader is clearly getting pushed out now. Companies with large portfolios purchase as a LTD cvompany are exempt form Income tax and N.I although they pay corporation tax.

To be fair this pushing out of private individuals staretd with Osbourne appeasing the masses by cancelling out mortgage interest being deducted from tax. Let me explain ;

Landords don't currently pay income tax o n their " income " . They pay income tax on their income after adding back in most of their mortgage interest. That measn they pay a higher rate ! They get a 20% credit .

Extreme example - landlord has £1200 income in rent but his mortgage is £1000. Net they recieve £200 . In any sane world they would be taxed 40% ( most will be higher reate tax payers ) on £200=£80 tax but thanks to Mr Osbourne they dont get to deduct the mortgage interest ,. they get a 20% credit on said mortgage interest. Their tax is 40% of £1200 minus 20% of £1000 - THEIR TAX IS £280

Just let that sink in - Their net income is £200 but they are paying £280 in tax - Like WTF ?

Ok im giving an extreme example but you see wheere im comig from. Add NI into the equation you can see why masses of lanlords are selling up and this is not good for tennats. Mark these words , if Rachel from accounts adds in NI your rent will go stratospheric.
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Their income isn’t £200 though is it, they are paying off the house with that £1000 mortgage.

One of the main problems with Landlords is they expect other people to pay their mortgage to such a degree, they don’t even factor it in as a benefit, as this post I’ve quoted displays. It’s this attitude that leaves no one feeling sorry for Landlords.
 
hurfdurf said:
Their income isn’t £200 though is it, they are paying off the house with that £1000 mortgage.

One of the main problems with Landlords is they expect other people to pay their mortgage to such a degree, they don’t even factor it in as a benefit, as this post I’ve quoted displays. It’s this attitude that leaves no one feeling sorry for Landlords.
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Nope wrong - this is people's misconception of Landlords . HMRC would laugh me into court if i tried to off sett my capital repaymentpart of a BTL mortgage against my tax liability.

The vast majority if not all Landlords only take out an interest only mortgage to minimise monthly costs to incease cash flow and potential monthly profits. Read my post again, I never quoted anything other than mortgage interest and NOT the principal amount .How is that paying off a mortgage?
 
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Tram said:
Rent goes up, state gets more money.

Lol give it a bit of time and you'll pay NI on your pensions and savings.

CGT on your main home is coming be prepared for that.lol.
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OK, funny you should mention this - I was talking to someone from NRLA last night on another forum - Natiional Residential Landlords Association .

So N.I on Landlords , think about that for a second . Currently when I'm 67 I become classed as retired and I'm exempt from National Insurance so with that in mind would I still pay N.I as a landlord or be exempt? OR maybe there is a change coming for pensioners paying N.I ?

Oh yes CGT on your main residential property is coming for sure.
 
Vonhelmet said:
Do you have any grounds for this? This will not happen.
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Anything can happen with this government

Asked a direct question and couldn't give an answer ! As a rule my life experience says if someone can't give an answer then you already know the answer.

UK's Torsten Bell fails to rule out capital gains tax for homeowners | AJ Bell

A UK Treasury minister has not ruled out hitting owners of high-value houses with capital gains tax, CGT, when they sell t
www.ajbell.co.uk www.ajbell.co.uk
 
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Bald-Eagle22 said:
Nope wrong - this is people's misconception of Landlords . HMRC would laugh me into court if i tried to off sett my capital repaymentpart of a BTL mortgage against my tax liability.
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That's not what he said, he said the tenant is paying off your capital element of the house (ie: at least covering the capital element of the mortgage*). So even if you aren't making a lot of revenue income in the meantime, you still have an appreciating asset being paid for by someone else. That is a factor that LLs tend to ignore when trying to play 'woe is me' on the worlds smallest violin.

*And if the LL is on interest only, then as you say they are maximising current gains rather than deffered capital gains, they still gain massively either way with the tenant funding their gain.

Bald-Eagle22 said:
Read my post again, I never quoted anything other than mortgage interest and NOT the principal amount .How is that paying off a mortgage?
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Tbf, if you read your post again you didn't say mortgage interest, which is why your post didn't make sense.

And your 'hypothetical' situation is complete nonsense and formulated in a way that would never happen. Ie: if your mortgage interest was £1000 (even on an interest only mortgage) then the size of the mortgage wouldn't be resulting in a £1200 rental income.
 
Bald-Eagle22 said:
Anything can happen with this government

Asked a direct question and couldn't give an answer ! As a rule my life experience says if someone can't give an answer then you already know the answer.

UK's Torsten Bell fails to rule out capital gains tax for homeowners | AJ Bell

A UK Treasury minister has not ruled out hitting owners of high-value houses with capital gains tax, CGT, when they sell t
www.ajbell.co.uk www.ajbell.co.uk
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Ok, so that’s talking about properties valued at over £1.5m. While I do think that’s a bad policy decision, it’s a long way off the complete abolition of PPR relief.
 
Freakbro said:
That is a factor that LLs tend to ignore when trying to play 'woe is me' on the worlds smallest violin.
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The only people who are going to play ‘woe on me’ is the tenants when they get a bunch of more money tacked onto their monthly rent due to our financially illiterate govt.
 
Bald-Eagle22 said:
Anything can happen with this government

Asked a direct question and couldn't give an answer ! As a rule my life experience says if someone can't give an answer then you already know the answer.

UK's Torsten Bell fails to rule out capital gains tax for homeowners | AJ Bell

A UK Treasury minister has not ruled out hitting owners of high-value houses with capital gains tax, CGT, when they sell t
www.ajbell.co.uk www.ajbell.co.uk
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We all know it goes from1.5 million to 100k to drag everyone into it. But there would be loophole for people like the duke of Westminster.
 
Vonhelmet said:
Ok, so that’s talking about properties valued at over £1.5m. While I do think that’s a bad policy decision, it’s a long way off the complete abolition of PPR relief.
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They introducing it to impact a few by the time you get up next morning you are in that group.

Those that own properties worth million don't sell the actual property they sell the holding company.
 
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Bald-Eagle22 said:
Nope wrong - this is people's misconception of Landlords . HMRC would laugh me into court if i tried to off sett my capital repaymentpart of a BTL mortgage against my tax liability.

The vast majority if not all Landlords only take out an interest only mortgage to minimise monthly costs to incease cash flow and potential monthly profits. Read my post again, I never quoted anything other than mortgage interest and NOT the principal amount .How is that paying off a mortgage?
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But that is the point, the renter is paying the interest on the landlords mortgage and thereby enabling the landlord to jave the property in the first place and profit from renting
 
Tram said:
They introducing it to impact a few by the time you get up next morning you are in that group.

Those that own properties worth million don't sell the actual property they sell the holding company.
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And then pay capital gains tax on the sale of the shares in the holding company?

Back to the drawing board.
 
Vonhelmet said:
And then pay capital gains tax on the sale of the shares in the holding company?

Back to the drawing board.
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Not really, probability ways around this like there always is maybe load it up with debt,.treaty jurisdictions
 
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Vonhelmet said:
I mean, there’s always tax evasion, sure.

There’s not really an easy, legal way to avoid paying tax on the gain on selling a property like you think there is.
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I am not an accountant so I don't know. All I know is ones I heard about. I don't need to worry about that.
 
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Freakbro said:
That's not what he said, he said the tenant is paying off your capital element of the house (ie: at least covering the capital element of the mortgage*). So even if you aren't making a lot of revenue income in the meantime, you still have an appreciating asset being paid for by someone else. That is a factor that LLs tend to ignore when trying to play 'woe is me' on the worlds smallest violin.

*And if the LL is on interest only, then as you say they are maximising current gains rather than deffered capital gains, they still gain massively either way with the tenant funding their gain.



Tbf, if you read your post again you didn't say mortgage interest, which is why your post didn't make sense.

And your 'hypothetical' situation is complete nonsense and formulated in a way that would never happen. Ie: if your mortgage interest was £1000 (even on an interest only mortgage) then the size of the mortgage wouldn't be resulting in a £1200 rental income.
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No . It dosn't make sense to the uneducated people who have zero idea of BTL finance and its evident quite a few of you on here don't. I belive you do but I'll put you firmly in the LL haters camp.


Very few landlords make capital repayments on their mortgae and the vast majority are interst only.

And my hypothetical is happening way more than you would imagine , people have leveraged themselves up to the hilt on BTL and are happy to make zero profit for a 10 year period . The end game being selling an appreciating asset that they only pay CGT on - admittedly this is more London and the south east but I did say extreme. As a rough guide a £250,000 property will achieve around £1200 a month in rental income with a £50,000 deposit or equity a £200,000 2 year fixed rate mortgage @ 6.29% runs at around d £950 to £1000 a month , that's an avergae. You might get one for less, you might get one for more dependant on usual criteria , rental income , lease length, personal credit score ect ect. These are BTL mortgages not residential and are more expensive, if your property is in a company name the mortgage would be even more.

But my point still stands regardless of anyone's moral point of view -love us or hate us private Landlords are a necessary evil and if the government keeps hounding us with taxes there will be a massive exodus and rents will explode .
 
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