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The above question passed through my head
I think with having a number of properties I have become a Business owner
I know it feels to me as I do run a Business and I forget It was once a InvestmentSo what are you - Investor of Business owner ?
My own assumption is BTL is properly the only investment that can become a hands on business
As I have never sold a Property, I really don't think of its capital value (it's just a figure on a spread sheet which I can't spend unless I sell).
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
Well I am told that I am an investor according to the tax department .
But my bank tells me I run a business so they can charge me money .
I have had the same conversation myself
Environment Agency treat us as a business
HMRC - it’s an investment
Both govt departments!
Although I accept that others will view me as both an investor and a business, I don't consider myself either. My interest in property is little more than a hobby. I've invested some time and some money in something I enjoy and I have to be aware of certain rules. I receive an income from property but I also make a small profit on my hobbies so even financially its hard to differentiate.
Maybe the term 'cottage industry' covers all aspects.
I feel i run a business, I do everything aside from finding tenants ( that may well change) and certification ( gas, electric, fire alarms).which i’mmnot qualified to do.
i converted one block and built the other. Whilst for 15 years it was another string to my bow its now my sole income. Difficult to justify its an investment but hmrc do.
This is what tax law says - and it hinged upon Ramsey proving that she was undertaking a minimum of 20 hours per week in running her property letting 'business'.
What constitutes a ‘business’?
The problem is that there is no statutory definition of the term for CGT (or income tax) purposes. As a result, in Ramsay v HMRC (2012), the First-Tier Tribunal judges were asked to consider the position.
The Tribunal had to consider whether the taxpayer’s activities in connection with the letting and administration of the property simply amounted to the passive receipt of rent (ie an investment activity) or whether those activities were sufficient to constitute a business. The Tribunal decided that the activities carried out by R were ‘normal and incidental to the owning of an investment property’ and arose out of necessity for the landlord of a property let out as flats.
In the event, R appealed against the First-Tier Tribunal’s judgment and the Upper Tribunal has recently found in her favour. Crucially in Ramsay v HMRC (2013), it was confirmed that the word ‘business’ should be afforded a broad meaning for CGT purposes. The judge concluded that R was carrying on a business.
I once considered myself an investor in a cottage industry but today I feel that if I was purely an investor I could sit back and watch my investment from afar .
With constant new legislation and the increasing need for day to day involvement , business decisions that I alone must make have changed my mind.
Perhaps at least portfolio landlords should receive the recognition of businesses .
This question should be debated in HOL/HOC - as until say 3 yrs ago HMRC said all private landlords were running a business - with all allowable costs (incl all loan interest) being tax offsets as per all businesses.
Tesco may have a frequent habit of investing in more stores to increase overall profit - but they are still classed as a business.
Sorry, what's HOL/HOC please?
Houses of Commons/Lords.
I've always felt that HMRC's concession of allowing loan tax relief to landlords who buy property a newly-formed Ltd Co, regardless of whether they meet the Ramsey test or not, whilst at the same time subjecting other professional landlords to S.24 is unjustifiable; and I'm surprised that nobody has been able to make a successful legal challenge against this illogical anomaly. The only thing I can think of is that HMRC hadn't envisaged so many people seeing an opportunity to swerve S.24 by taking this incorporation 'loophole' route; and they've decided to just bide their time to catch as many people as possible in another hit - maybe S.25.