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  • Tax

    Pensions Vs BTL and Taxation

    I have done a number of Blogs on Pensions since the advent of changes of taxation on BTL

    A great number of landlords make a very valid point that BTL is far better  than Pensions for two main reasons

    1 The Power of leverage  ie you invest 25% cash and 75% Mortgage and you have growth of 100% of the asset

    2 adding value ie building extensions and conversion

    and I agree that the above are major points and good ones to invest in property

    But the BTL investment also has draw backs None Payment of Rent Repairs are just to negative sides of BTL to name only two  which can reduce your profits and I could name quite a few others

    I have said this before the worsted thing about pensions is the Name PENSIONS ??? it has a reputation for High Charges and an old person standing outside the Post Office

    I personally don't think of pensions in this way I think of a Pension as an offshore company which pays No Tax In fact the Govt send me a tax rebate for my pension

    I like property otherwise I would have sold up long ago I haven't

    But the Taxation and regulation is becoming a factor in all our property investments

    In round terms Property makes more money on the top line for a lot of effort

    But the net profits compare quite well with pensions for No Effort

    Of Course If I had a young person in front of me asking should I invest in property I would say yes Go for it ??

    But for an older investor who has the wealth already I would say consider Pensions

    The Taxation as favourable for a 40% tax payer

    The benefits of passing down wealth should be examined  You can avoid quite a lot of IHT with pension planning today

    You can have 25% of your pension fund and you can still put up to 40K a year into your pension

    My conclusion is and has been since Osborne Law is cream off some of your BTL profits if you can and put it in your offshore company

    If your a Director or Employed or Self Employed look at the advantages of your own Pension (Offshore Tax Free Co)

    The projections of what is best has narrowed in my opinion

    Losing 50% tax on BTL profits is not helpful

    Losing 40Tax on my Death is not helpful too my family

    Losing 28% CGT on selling a property is not helpful

    My advice is look at your options and refresh your knowledge of Pensions

    Charges can be lower than you think and with a little bit of knowledge you can reverse the Taxation effects of BTL

    You can use both in your quest for wealth

    Im going to put a great deal more in my Offshore Company and I look forward from the Cheque arriving there from the HMRC every year

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    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.

    ``In round terms Property makes more money on the top line for a lot of effort``

    I admire the way you diversify and are constantly monitoring / reviewing your strategy

    Effort is subjective though  - Climbing a mountain is effort -

    But I enjoyed the one I did climb once, so is that an effort or a joy or in fact both

    As energy levels decrease  with age,  delegation is the answer I believe 

    That reduces the effort needed when the bones ache  - but you get the same result

    That`s why I tell my tradespeople to invest in property - One day their bones will ache

    Yes by delegating you give away some profits in return

    But your profits are greater anyway as you get better each time

    Viewing a property and putting in an offer and securing a deal is a buzz for me, not an effort

    I can still do that when I reach  75 years if I choose to

    Its an hour out of my day . I salivate on approach to the door thinking this could be the one

    I don`t salivate with pensions

    98% of the property effort that follows a viewing can be delegated if one so wishes

    At 75 you use 50 years of experience and condense it into one hour to make your money 

    You can cherry pick other tasks if you so wish or go and have lunch with a friend  or play snooker

    I saw a man aged 75 do this delegating with me when i was 45

    He secured my business worth £5000 to him over a cup of coffee and reminiscing about life 

    We shook hands and he waved his hand to his employee indicating for them to take over now 

    Their  job was to do the paperwork as his job was done  .

    It took 50 years for him to get to that position though when he could do that

    He  earn`t  £5000 in that hour 

    I was in admiration of that moment

    I went away to work out how he did that so I could perhaps duplicate

    Pensions for me is like starting again when I  dont have to . Yes I know they have their place

    But the ensuing passive rental income and CG emanating from a one hour viewing is my pension

    I find I have to look no further .

    If I want more pension I just look at more houses






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

    I do both going forward

    why look a gift horse in the mouth

    if I can get help of the govt to build wealth I will take the money

    i don’t see opportunity in property at present

    if property prices keep rises in the north I welcome it but I won’t purchase as yeild will drop

    I like my offshore funds it’s still my cash and I can dip into any time I want if I saw a BTL bargin

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    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 don’t see opportunity in property at present``

    Have you knocked your 4 yr plan of the build to rent on the head then ?


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

    In short J C no my build to rent goes on my first phase is now coming to an end

    three more to go

    this is why I said I will hold onto what I have

    my own view it not pension or property it’s both

    I won’t  levarge as you know so traditional BTL is not on my radar

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    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.


    Ah good . I thought you may have shied away after phase 1 by what you said 

    I was puzzled when you said you `don`t see opportunity in property at present` 

    but you clearly do as you are continuing to invest funds  heavily going forward in the 3 new phases of build to rent property .

    Good luck with those

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

    Thanks JC

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    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.

    ``if property prices keep rises in the north I welcome it but I won’t purchase as yeild will drop``

    Thats reverse logic isnt it . Its an argument for buying today

    I dont measure yield against today`s  PP of stuff I bought  5 years ago

    I measure it against my debt

    Buy at 100K today in the north  . It rises to 120K as some predict in 5 years

    Your yield v debt will be the same and you will be 20K richer on paper as well with CG

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

    Jc I have seen this before in the north

    if we do get 17% growth it will only be 10% higher than the peak prices of 2007

    think of that for a moment that’s 15 years investment for 5% growth

    I know home owners still in neg equity from the last crash


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    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.


    Yes - You called it wrong from a CG point of view then but thats life

    But that`s history now and you learnt from it and battled through as you still had yield

    So today if you bought you dont feel 20% growth in 5 years will happen i take it


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

    I did not call it wrong in the larger pic

    all provide good yeild

    I stopped buying BTL in 2005 as prices were rocketing

    but I doubled my bussinss again after the crash in 2007

    since the crash my new property has done very well I bought houses for 70k there now worth 125k but there are homes in the same street that were purchased for 145k so it will need more rises to get home owners out of negative equity

    the north is an odd market and we Wil see buyers flooding in the comming years

    when it goes wrong which it will I may buy again just as I did in 2007 after the crash

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    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.