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Hi,I'll keep it simple because i feel like this type of question has been thrown around profusely over the last few years but i feel like im in a slightly more unique situation.
- 200k to invest into property
- i have 0 taxable income
- wife has income of ~45k and we have a mortgage currently on our house for around 60% LTV
- looking to invest for the very long term and create a monthly cashflow so i can do this full time.The main worry is setting everything up correctly from the beginning tax wise so that i am not regretting it in the future. I've seen a few accountants but they all seem to be very rigid in their thinking and not really answering the questions about long term tax planning. Is it better to go down the SPV route or hold them personally? With the assumptions above that this is a 25yr+ plan
If i have missed any info then please let me know. Also i understand there is a lot of 'it depends' but any info would be great
Hi Daniel,Will you be getting mortgages in your name? If so, how will you do that with no taxable income?A general comment - keep your LTV's under 60% LTV and you should purchase as a sole trader.I am not a tax advisor, so hesitate to give any advice as it is highly personal to you.However, I can direct you to resources that answer this question:The BIG tax issue: Should I incorporate? Why BTL incorporation is an expensive mistake What is Section 24 for landlords? Hope that helps for starters?
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Thanks for a speedy response. Will take a look through those links.
Is a taxable income a hard rule for BTL mortgages? The research i did and talking to a few brokers suggested that it wasn't always the case.
You typically need an income of £25K for BTL mortgages, and, if self employed, will need to show 2 or 3 years accounts.If you mean that you earn money from a non taxable income, like gambling for instance, then this would not apply to you.The specialist team at Property Tribes Financial Services on 01206 654444 will be able to advise you of the exact lenders you have access to with your personal circumstances, and, as the money always comes first in property, a conversation with them will bring huge clarity to your situation and what finance you can access.
You hit the nail directly on the head. I earn my money through online poker, which caused a problem with my original mortgage as they would not account for any money i had at all because it wasn't taxable. Did lead to some funny response when they asked us how long we could survive if my wife lost her income!!
Always best to buy in personal names, especially if you're planning to build, run, and grow a professional property business.
Founding Director, for and on behalf of
Less Tax For Landlords
0203 735 2940
Firstly your gambling is only not subject to UK tax if you do not organise your gambling affairs like a business. It's a question of fact and entirely probably that you are not subject to tax but that is by no means guaranteed.
If you are looking for a BTL mortgage you need £25-30k minimum "taxable" income for the best rates. Therefore you need to borrow on the back of your wife's income. But you don't want her to have the taxable rental income, so it's either:
1) buy together as tenants in common and declare all the income as yours, etc
2) joint applicant sole proprietor (ie the modern guarantor) mortgage.
And as to long term structure no one can advise, unless they are predisposed to a particular solution, without knowing more. What are your long term plans? Will you buy more. You want cash flow but why - to buy more property or subsidise gambling? What are your long terms plans (ie does gambling pay)? Do you have children? Proper advice needs a complete picture or you will get unclear answers or a good answer based on half the facts - what you've already identified as an issue.
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
Thanks for the detailed response. I’m almost 100% sure that online poker winnings is not taxable in the UK. As for other forms of gambling I have no idea but for poker I’m sure.
The 2 scenarios you mentioned are what I was thinking about and the first one was suggested to me also by another account.
In terms of the long term plan. I want cashflow initially to allow my wife to quit her job and also to continue investing within property. I would also be using online poker to add to the property fund which would allow me to scale significantly in the future. So I would ideally be looking at a continuously growing portfolio
I suspect your set up that you wont have to pay tax on your poker winnings. But it is not a carte blanche on gambling because bookies also gamble but as they are organised as a business (and may the odds be ever in their favour ) they pay tax (a lot of tax). So so long as you are not setting up the game like in Molly's Game you are probably ok.
As to your tax question you are now getting to specifics and I think you need to take professional advice.