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I don’t see how you can be better off. It’s a tax restriction. There is no upside for the tax payer. Your calculations are incorrect (I have also commented on this somewhere from someone’s calculations) or some other variable is making the difference,
Chartered Accountant, Tax Advisor and Mortgage broker
(and BTL portfolio owner)
"all costs other than Interest £49,768 "
What the hell, is that figure made up from ??
That's because DL spends 1/3 of her rental income on maintenance. Most others spend around £500 on each property
Based on the rental income quoted, that would get you between 7 or 8 2 bed flats in East London, renting at £1500pcm. Total spend on maintenance over the year would be around £4k
So I think the biggest threat to DL is not s24 but her maintenance bill !!!
I must point out this is not my account
but a flavour of some one I know
I have to say that I would rather spend money on repairs than I would pay 40% tax
but setting this aside you can see how much tax a salary landlord will pay
it’s just an illustration
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.
I could go on every thing you charge other than intrest
If the properties are managed at 15% (including VAT) that gives a cost of £21,150 before any addition charges for reletting.
It will cost us an extra £800 a month in tax. The only way I can pay that is rent increase. Fortunately we have kept our rents low for a number of years so I am able to increase. However, my tenants have been with me for a number of years and I really don’t want to increase the rent. I have great tenants across my portfolio, what a shitty thing this S24 is.
I would agree 109% about your views
Even before S24, an individual who was through their job a higher rate taxpayer, was paying higher rate tax on any BTL income. I am what would be classed as a professional property investor these days (10 HMOs, some SAs, major conversions, BMV/DTV purchases, new build, company, SPVs, investment in bigger projects, much business infrastructure etc) but the first baby step prior to resigning the job, was to buy (cash) and let a flat. By the time the rental income had been taxed, we had half, most of the other half went to HMRC. 'Leverage' it, I hear you say, but now S24 is going to block the power of that especially for single lets. At the time I noticed that the rent a room allowance could readily enable a lodger arrangement to outcompete the 'major' investment in a city centre apartment! As it happened, the apartment was sold and the cash used to purchase two 6 room HMOs (leveraged with mortgages) - yes, I had read a couple of books by then and gained the knowledge and experience (NLA accredited, on the forums etc) and contact network. HMOs of course are a much more active business and one has to earn the income, so the 5 fold greater ROI achieved did cost a bit in time. And pro investors will find multiple income streams for their business, major works that add value etc etc, and they will likely incorporate in order to not face higher rate tax but build their business under corporation tax conditions. Overall, it seems that the 'soft zone' of job based higher rate taxpayers with a bit of passive BTL investment on the side is getting heavily squeezed, navigating that soft zone in any transition from job to property business will be more challenging or need different strategy, and any pro property business will need to steer a tighter ship given some greater fiscal and regulatory drag factors now emergent.
I totally agree
the landlord with income from job or pension is going to get hammered
i think the landlord who treats BTL as a job will be in s much better position to Handel the changes