Osborne's 2017 Landlord Tax

[poppet2]

Buy as cheap as poss at auction, spend as little as poss to make it serviceable for tenants then let it to DSS claimants and you can easily achieve a 10% yield.

 

If the yield is so good, why not rent and take this same strategy to non DSS tenants?

[RonJeremy]

Buy as cheap as poss at auction, spend as little as poss to make it serviceable for tenants then let it to DSS claimants and you can easily achieve a 10% yield.

 

I don't envy you doing that. Hope you make a few quid out of it.

[poppet2]

If it's all about yields, why do Londoners pay a fortune for their property, even at auction, when they could pay far less up North, AND still gain the same yields?

[biotechpete]

Is rental income always taxable at 40% regardless of total personal income? Or will this only affect higher rate tax payers?

 

I would imagine that a lot of properties will be put into Ltd companies and profits paid out as dividends.

[Crosser]

Why would it be grey? Compared to when Labour were in power, we are engaging in less illegal wars thereby causing hundreds of thousands less deaths and the income tax threshold has gone up, meaning I keep more of my wage.

 

I am far from a toff and only slightly above the national average pay and life is better under the tories for me.

 

It is only life's losers that are complaining. Labour supporters think he country owes them a living, the rest of us realise how lucky we are to be born into this society and think that we owe the country.

 

Lifes Losers? ......... OH get real!!!!!

 

While I realise that some people don't even try to improve their lives, there ARE many many more who attempt to "climb lifes ladder" only to be kicked back down said ladder by people who have such condescending views as your good self.

 

There is little wonder that people have no regard nor respect for the people they put their trust in, only to be called "lifes losers"

 

You may as well just call them "Plebs", as that is how you come over.

 

Try looking at how you treat people before how you expect them to treat you.

[mafya]

Is rental income always taxable at 40% regardless of total personal income? Or will this only affect higher rate tax payers?

 

I would imagine that a lot of properties will be put into Ltd companies and profits paid out as dividends.

 

It goes on your personal income tax rate but the rent received could push you into the higher rate tax bracket.

Good article here with more info= http://www.thisismoney.co.uk/money/guides/article-2687432/Buy-let-What-tell-taxman-reduce-bill.html

[RonJeremy]

Is rental income always taxable at 40% regardless of total personal income? Or will this only affect higher rate tax payers?

 

I would imagine that a lot of properties will be put into Ltd companies and profits paid out as dividends.

 

No not under this government. It depends on what you earn.

 

---------- Post added 05-11-2015 at 07:35 ----------

 

If it's all about yields, why do Londoners pay a fortune for their property, even at auction, when they could pay far less up North, AND still gain the same yields?

 

Because it's not just about yields.

If the kitchen sink is blocked, and you get a phone call from a tenant asking you to unblock it for them, you may find it easier to pop round from Clapham to do some plunging in Fulham than Fulwood.

I would have thought this was obvious.

[Cyclone]

No that's not how it works - look at the legislation again - the rents are not affected by the loss of interest relief - only the mortgage payments on a business based loan. It is irritating to me as a landlord, but actually on reflection it is the fair thing to do as BTL landlords will have to put up rents to make a profit/break even from their business model, which will have a marginal effect on encouraging people to buy their own houses. It was probably "unfair" (yes I know life isn't fair) on people who only wanted to buy their own house and couldn't get interest relief, whereas someone buying to let as a business had an advantage by getting interest relief.

The Tories were standing up for hard working families. If not for hard working landlords.

 

Neither the rents or the mortgage repayments are affected.

 

What's affected is the calculation of profit, previously you would subtract the mortgage interest from the income along with other costs to calculate the profit. Now you can't do that.

 

In a nutshell, landlords will no longer be able to deduct the cost of their mortgage interest from their rental income when they calculate a profit on which to pay tax.

In other words, tax will be applied to the rent received – rather than what is left of the rent after the mortgage interest has been paid.

So tax rates will, for some, exceed 100pc: landlords will have to pay all of their profit in tax, and then pay more tax still.

 

If you are a basic rate tax payer only, then you will be no worse off as

 

The Government will allow a tax credit equivalent to basic rate tax (20pc) on the interest, but this will do little to offset the increased cost.

Not true that it will do little, that's journo spin. It means that if you're a higher rate tax payer, you will lose 20% of the offset you could apply previously, as what was previously NOT considered profit, is now considered profit, at your personal rate (40%) but then gets a credit of 20% applied.

 

To pluck a number out of the air, if you're paying £200 a month in interest (a reasonable figure), you will find yourself paying an extra £40 a month in income tax (if you are a higher rate payer).

If your rental amount is £600/month, and the previous profit was £400, then you're yield has just dropped by 10%.

 

---------- Post added 05-11-2015 at 09:26 ----------

 

Landlords will have to put up rents to make a profit or break even!!!

 

If this is the case, why don't landlords invest their money elsewhere then BTL properties? What is the average yield on a property these days and what is the least yield you would accept Ron?

 

I ask because banks are now offering 5-6% interest, without the hassle of being a landlord.

 

What bank is offering 5%, I'll put money there!

 

---------- Post added 05-11-2015 at 09:27 ----------

 

Is rental income always taxable at 40% regardless of total personal income? Or will this only affect higher rate tax payers?

 

I would imagine that a lot of properties will be put into Ltd companies and profits paid out as dividends.

 

Dividend taxation is being changed as well.

[sgtkate]

No that's not how it works - look at the legislation again - the rents are not affected by the loss of interest relief - only the mortgage payments on a business based loan. It is irritating to me as a landlord, but actually on reflection it is the fair thing to do as BTL landlords will have to put up rents to make a profit/break even from their business model, which will have a marginal effect on encouraging people to buy their own houses. It was probably "unfair" (yes I know life isn't fair) on people who only wanted to buy their own house and couldn't get interest relief, whereas someone buying to let as a business had an advantage by getting interest relief.

The Tories were standing up for hard working families. If not for hard working landlords.

 

Apologies, I was taunting Penistone and didn't word it very well. You lose tax relief on the mortgage interest, is that right? Which I'd agree is fair, why should you get tax relief on interest? If your business model can't afford the interest payments without it then it's a poor business. Tax relief like this has helped push up housing costs as so many poor landlords have jumped on the gravy train. Going on previous posts, I'd put Penistone in that category and not you. We may differ in views but you seem to come across as an employer who cares about his staff, and therefore tenants as well.

[spilldig]

neither the rents or the mortgage repayments are affected.

 

What's affected is the calculation of profit, previously you would subtract the mortgage interest from the income along with other costs to calculate the profit. Now you can't do that.

 

 

 

If you are a basic rate tax payer only, then you will be no worse off as

 

 

not true that it will do little, that's journo spin. It means that if you're a higher rate tax payer, you will lose 20% of the offset you could apply previously, as what was previously not considered profit, is now considered profit, at your personal rate (40%) but then gets a credit of 20% applied.

 

To pluck a number out of the air, if you're paying £200 a month in interest (a reasonable figure), you will find yourself paying an extra £40 a month in income tax (if you are a higher rate payer).

If your rental amount is £600/month, and the previous profit was £400, then you're yield has just dropped by 10%.

 

---------- post added 05-11-2015 at 09:26 ----------

 

 

what bank is offering 5%, i'll put money there!

 

 

 

this is very true, and if you do find one that's offering 5%+ it will have more strings attached than a piano.

---------- post added 05-11-2015 at 09:27 ----------

 

 

dividend taxation is being changed as well.

.

Sorry about the semi transparent print. I don't know why it's printed like that. .

Edited November 5, 2015 by spilldig