user_447

Registered with Property118.com
Saturday 29th June 2013


Latest Comments

Total Number of Property118 Comments: 5

Hotpl4te

15:13 PM, 13th October 2014, About 7 years ago

My First Tax Return as a Landlord

Hi - thanks for your responses. I have a friend who I went to College with, who now owns his own accounts firm. But he is dragging his feet in replying to me. Hence I sought advice elsewhere. I think I will have to go and see him and sort this out.

I originally paid £138,500 for the property. When I re-mortgaged I took out £165,000 against it. I used a Broker. He was fully aware of my intentions and plans. He spoke with several lenders for me, and the NatWest basically offered me a Mortgage at 3.1% fixed for 5 years over 20 years, on the "understanding" that "as long as I made at least two payments" I could then apply for Consent to Let and they would normally grant this.
Everyone else wanted to offer me a Buy to Let Mortgage.
So I took the NatWest offer. Played the game. Repaid a Mortgage on an empty house for a couple of months. Applied for Consent which was granted and only then did I invite an agent to put my house on the market for rental.
Took a bit longer than expected to find someone I liked. they moved in.
Now I am just trying to get my head around all of this.
A colleague of mine has just had a bit of a shock. He rents out his first home. Has done for 10 years. He went to see an accountant many years ago and the advice was "don't worry it's not making a profit". If anyone says anything, come back and see me and I will see that you don't pay any tax.
Now this advice appears to be miles from accurate. The grey area is "profit". My colleague has a repayment mortgage the same as me. And we both are now aware that we can only claim tax relief on the interest, not the capital.
Where as we were both under the impression that as the rent does not cover the mortgage payment (interest and capital) there is no tax to pay!

Regards... Read More

Hotpl4te

21:20 PM, 7th July 2013, About 9 years ago

Tax Relief or No Tax Relief, that is the question.

Colchester is 250 miles away from me.
Sorry but 500 mile round trip???... Read More

Hotpl4te

18:26 PM, 7th July 2013, About 9 years ago

Tax Relief or No Tax Relief, that is the question.

Howard, I may very well end up doing just that. But there is no way I would go to a meeting like that unprepared. I would want to do a lot of research first.
There is no way I would trust a stranger with this kind of stuff and just hope they were telling the truth, knew what they were doing and honestly had my best interests at heart.
Other's might be happy to do so, but I have been around the block too many times to be that trusting of a stranger.... Read More

Hotpl4te

16:16 PM, 7th July 2013, About 9 years ago

Tax Relief or No Tax Relief, that is the question.

Hello and thanks again for your comments.
I am currently starting the process of trying to raise money on my current home, and then topping up with my deposit and a new mortgage on my new home.
I have £50K as a deposit. Plus £10K for fees. moving expenses etc but that is the lot.
My current home is now valued at £225K. The home I am planning to buy is £220-235K.
My rental income for my current home is £850, due to location. The town I live in is very much working class in the North West.
The mortgage on my current home I will take for 20 years which is up to retirement and at this point I will sell it.
The mortgage on my new home I plan to pay off early so needs to be flexible like that.
My question is - how do I work out the "optimum" amount of borrowing on my current home (rental to be) property taking into consideration my deposit and new mortgage?
Is there some kind of limit or ideal number to work towards?

PS - Not married, just me involved, no dependents, 40% tax payer, totally debt free at the moment.
Thank you!... Read More

Hotpl4te

20:25 PM, 3rd July 2013, About 9 years ago

Tax Relief or No Tax Relief, that is the question.

Hello and thank you all for your comments. I have had to read them a couple of times but it is sinking in now. My original plan is seriously flawed it seems. If I continued with that route I would suffer heavily by having to take a 40% tax hit on the deal on over 10 - 13 years that would be £40K lost in tax, which is a really poor deal for me and not one I can accept.
I am single , never been married (and quite a good catch ladies ;-)) and dont own a limited company.
It seems that my only option is to go the long way round and take out two mortgages. One on my current home to put a loan on the property and one on the new home to bridge the deficit from Loan 1 plus my own deposit.
My home has been appraised and I have been told that the maximum rent I could get for it is £850 pcm based on the town I live in. Its very much a working class home in the North West UK.
So I know the rental income that can be achieved, but how does this affect the amount I can borrow against this home?
Do I have to go down the BTL route for my remortgage? Or can I get a residential loan on it at lower interest?
Surely I will have to declare that the purpose of the loan is to put down as part deposit on the new home? Which surely then ties me to BTL only deals?
Second Mortgage I would hope would be much more straight forwards as I would have a hefty deposit for that property.

Am I on the right tracks now?

Thanks for the help so far,

PS Cheer up Sarah... Read More