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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 ?????
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 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
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
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
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
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 ???
"and I get favourable terms with IHT too ???"
What is the relationship between pension and IHT?
I think this video may help.
Thank you DL.
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?