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I had a little spare time this morning and I thought I would look at a scenario comparing a working Landlord with a Landlord who only has BTL income.
The figures are made up, but the S24 is high and I have only looked at the Tax situation 18/19
So here goes:
First the figs of a non working Landlord Working Landlord Salary £50,000
Rental Income £141,000 £141,000
all costs other than Interest £49,768 £49,768
Total Interest for Year £57,801 £57,801
Interest Deductible 50% £28,900 £28,900
Tax Credit for 50% £5780 18/19 £5,780
Total Tax Bill before credit £13,510 £27,725
Tax credit £5,780 £5,780
Tax Due £7,730 £21,945
The tax difference because you have a 50k income is £14,215
The main point to note is we are only half way through S24!
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 feel like a total failure looking at those figures, my salary is £25K and my rental income is about £10K, I must be at the bottom of the food chain
You have not failed you are successful. You were born
The rest is hype
Be careful with whom you compare yourself if you are vulnerable to affluent people around you
Compare yourself instead maybe to those who have no job no food no shelter and live in war torn countries
Some people are inspired when they see those who are richer and it motivates them to do well
Some people though feel deflated and feel a heavy weight on their shoulders
Money can be a mirage -
Some of the poorest people are the happiest
Aim for happiness first - the rest will follow
Jonathan Clarke. http://www.buytoletmk.com
Please don't ever think of yourself as a failure in life. You could never have been a bigger failure than me by the age of 50. At the age of 40, I was £35,000 in debt to the family after losing my own house and five HMO's in 1990 when the interest rates escalated to17%. By the age of 50 and working in my uncle's care homes I was still in £35,000 debt with no personal property or BTL's and zero assets. My big break came when I borrowed £110,000 from my Uncle in the year 2000 to buy our own care home (effectively on 100% mortgage) which we sold in 2006 giving us enough money to repay my Uncle and get into property once more.
Over the last 18 years, we have accumulated well over £4,000,000 of property assets comprised of a care home for the elderly, a big HMO and numerous BTL's. My passion at the age of 68 is to see how much more I can add to this before I die. I am driven by a sense of achievement, not for fast cars and fancy holidays but for progressive property acquisition. I know what it feels like at 50 to have worked hard for 30 years and still be in debt so now that I have been released from the chains of destitution and poverty I relish every minute of my latter-day fortunes.
Out of intrest are you expanding via a company or are you buying with low leverage in your own name
Not a failure in any way! In fact 10K is only 2k short of my lean financial independence number that I am striving for so when I hit 10K I will count myself as well on the way to my first success milestone!!
If you break this down further, the profit here is £33.431 and a working landlord is paying over £21k on his BTL income and that’s only this year! Can you imagine the tax bill in 2021?
It's horrific if your income comes from outside BTL.
i'm not so sure that is correct, I am a working landlord, when I do the maths, it works out I will be £700 per year better off in 2020, when S24 is fully implemented.
I have posted the calculations on a previous thread somewhere.
I use professional landlords Softwear and I think it is right
if I use the RLA calculator the figs tally for 2021 is around £30900 which is the total profit
"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 !!!