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  • Tax

    My BTL has become a Pension Machine

    I have a quite a large business in BTL and its very profitable

    Before the Tax Changes I was happy to pay 40% Tax and save 25% deposit and buy a good yielding property

    It was great Money for old rope really and I have made a very good living

    I had a lovey property drop on my lap yesterday and in the old days I would have jumped and purchased it

    Now I just can not make the figs stack up because of Tax

    It doesn't matter how I cut the cake - be it in my name or via my company - it's just not worth the effort or Taxation

    I am only 6 years from retirement so Pensions are top of my list for the future

    I can fund my Directors pension with nil taxation

    I can fund My Personal pension from self employed income and gain 40% back

    My BTL has become a Pension Machine!

    This is not the way I wanted my business to go

    Even with a little bit of Capital Growth (1.5%) it's not worth doing

    Do other large Landlords who Pay 40% feel the same?

    I find Pensions so attractive now They get around IHT and I can pass down my pensions funds to Family so much easier then BTL

    Its very frustrating to say the least but what can I do

    I can find the Property at BMV but taxation really puts a spoke in the wheel

    Are others finding themselves in this position with BTL?


    Learn Change and Adapt ?????

    I only really know what you have highlighted on here and thank you for that

    But I was with my accountant yesterday and run it by him

    After 10 mins he had lost me. I couldn't keep track  it was a minefield 

    There are good things he said but you have to weigh that off against the downsides 

    In the end he knew he was losing my attention

    I sighed and said - Cant I just go and buy another property instead please

    He nodded and said  well yes  you could you know your stuff

    So unless someone convinces me in plain English speak I will put pensions in the pending tray for now

    I`m viewing a property  in an hour - 25K  off MV - They are motivated sellers 

    I`m first to view -

    Get in there my son


    Jonathan Clarke. http://www.buytoletmk.com

    Your Right You could make 25k but how much is it costing you for deposit stamp duty Mortage fees ect ect

    Then when you make you profit and you come to sell how much would you have

    If I were to purchase similar I would lose over 50% Tax on the gain if I do it via a company

    I could not purchase with a Mortgage in my own name due to S24

    I have ran the sort of deal you are talking about it and it just doesn't stack up

    The Landlord in me says But you will have rent increases ???? But then we may get rent control ????

    The Landlord in me says But You will have Capital Growth ????? I think it will be very low going forward maybe 1.5%

    If the two factors above could be relied on I could see maybe a reason to invest

    Yes you can make 25K but at what risk long term unless your flipping

    JC Can I ask a favour can you show me the sort of deal you have in mind

    The cost of property

    The LTV your using

    and the rent you would achieve

    What repairs and general running costs

    Be honest  Just the deal I want to make a comparison

    I would like another  view on this

    Thanks DL


    Learn Change and Adapt ?????

    I`m buying cash

    Chance to refurb and add more value

    Could flip or hold

    I`m not as worried as you about rent control I dont think it will happen

    I think MK will still have CG and it will double in 20 years

    25K is 25K -  Lets say I only make 50% of that after everything so  12.5K

    Lets say I spend 40 hours on it to get it up and running

    That`s    £312.50 per hour return

    I can do that and have a director pension surely

    No need to  lose touch with my roots

    Where else can I earn that kind of money  in 40 hours


    Jonathan Clarke. http://www.buytoletmk.com

    You have highlighted what I think

    BTL for high rate tax payers only works will when you purchase for cash and that’s a big change to make this work you need a lot of cash in your pocket if I put 20k in a pension I could make 8k tax free with a pension with nothing more than a click of a button

    but that’s another topic JC


    Learn Change and Adapt ?????

    You still have to make a profit to get this 40% relief yes

    40% relief on limited  profit  is no good and that is  what I am wary of

    I cant invest 10K in a pension one day and take out 14K in 6mths - or can I

    I can do that potentially in essence in property if I buy well and refurb  and flip


    Jonathan Clarke. http://www.buytoletmk.com

    This blog is about future investments JC

    Your going to buy a house for cash and make 25K profit on a revamp

    and pay 50% tax for doing it If you had purchased via a Company

    Because you are using cash it works

    The old way of 25%/75% doesn't work anymore

    and this is my point The cash I would have invested in a 25% deposit is better placed in a Pension

    The Tax man helps me so all growth is tax free and  can take 25% in 6 years with zero tax to pay

    and using 1.5% growth of a property for 20 years doesn't make as much as a pension with a growth rate of 8%

    Yes I need cash to make a pension contribution and that comes from my BTL Income within my Company

    NO CGT NO CORP TAX NO INCOME TAX and no Stamp Duty and I get favourable terms with IHT too ???


    Learn Change and Adapt ?????

    "and I get favourable terms with IHT too ???"

    What is the relationship between pension and IHT?



    I think this video may help.



    Learn Change and Adapt ?????

    Hi. What do you mean by a "Pensions Machine"?  You don't seem to be putting money from your business into pensions? Or do I completely misunderstand what you're saying?