Summer Budget 2015 – Landlords Reactions

by Mark Alexander

14:00 PM, 8th July 2015
About 4 years ago

Summer Budget 2015 – Landlords Reactions

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Summer Budget 2015 – Landlords Reactions

Budget 2015 - Landlords Reactions

The concern is;

Budget proposals to “restrict finance cost relief to individual landlords”Summer Budget 2015 - Landlords Reactions

To calculate the impact of this policy on your personal finances download this software



Comments

Jireh Homes

15:42 PM, 8th July 2015
About 4 years ago

Removal of the 10% Wear & Tear Allowance is a significant blow to those who lease furnished properties and the proposed replacement with an allowance on actual costs is a poor substitute. At present we do not claim on deposit for dilapidations as acknowledge this is covered by the W&T allowance. Potentially this will drive a more rigorous approach on claims, to the detriment of tenants. Allan

James dengel

15:58 PM, 8th July 2015
About 4 years ago

Reply to the comment left by "Jireh Homes" at "08/07/2015 - 15:42":

indeed the whole sector is become mired in yet more red tape.

Yet we are still not treated as a business ?

Gary Nock

16:12 PM, 8th July 2015
About 4 years ago

Neil / Yvette please forgive my ignorance. I have been offsetting my mortgage interest against profits since day 1. I have never claimed any tax relief on my personal income as my accountant does the return and never claimed anything like that. So have I been missing a teick?

Neil Patterson

16:17 PM, 8th July 2015
About 4 years ago

No you haven't missed a trick as you have been reducing your profits with the mortgage interest which you then pay tax on 🙂

There is no double accounting

It will make no difference unless you pay high rate tax

Claire Oswald

16:28 PM, 8th July 2015
About 4 years ago

Reply to the comment left by "Neil Patterson" at "08/07/2015 - 16:17":

Pay high tax rate on just the profit on the rental income or including any other (ie salary) income?

Claire

Monty Bodkin

17:24 PM, 8th July 2015
About 4 years ago

Reply to the comment left by "Claire Oswald" at "08/07/2015 - 16:28":

Including any other income.
Rental income is taxed at your personal rate.

Roanch 21

17:33 PM, 8th July 2015
About 4 years ago

Just got in, not had time to think about this much but agree with an earlier post that this deters people from having a taxable total income over £43k. So what can we do to avoid this?

1. paying into a pension reduces your income. I Think that would work.
2. Split your income with your spouse.
3. Transfer or sell property to children or other family members or add them to the deeds
4. Transfer or sell property to your ltd co.
5 put rents up. I guess this policy is designed to drive landlords from the market or restrict them entering the market. O level economics says market rents are set by supply and demand so this reduces supply and increases rents. Anyway the tenants can pay the increased rent because their pay has just gone up to £9 an hour. Min wage rising will create inflation which also means all prices including rents will rise.

Just my initial rambling thoughts. I'm not a tax expert and I haven't even got o level economics. 😉

gary dave

17:37 PM, 8th July 2015
About 4 years ago

Reply to the comment left by "Neil Patterson" at "08/07/2015 - 16:17":

Neil,

For the benefit of the forum can we have an example showing the impact of this change, lets assume the following in your day job you earn 100k and are therefore in the 40% bracket.

Lets assume we have a buy to let property which brings in £1000 rent per month and has an interest only mortgage of £600 per month. Profit is £400 per month assuming we have no other expenses or deductions. On the £400 profit we pay £160 tax as a 40% rate tax rate payer and have £240 left as net income to spend down the boozer.

How does the new regulation impact this example?

Gary.

Dan Smith

17:41 PM, 8th July 2015
About 4 years ago

Hi

Can anyone explain the tax and mortgage interest aspect in a 'dummies guide' format?

1 - Can you now not offset all of your mortgage interest against rental income?

2 - If you can what has changed?

3 - I don't understand the issue of '45% tax relief higher rate tax payers could offset, what is this? Because regardless if they are higher or lower rate they could offset 100% of the mortgage interest against the income so what's changed?

Thanks

Dan Smith

18:01 PM, 8th July 2015
About 4 years ago

Reply to the comment left by "Ros ." at "08/07/2015 - 15:37":

I think you got your figures mixed up

240k - 60k -60k = £120k/by 2(your partner) = £60k profit not £80k

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