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About me, I invest in property.
When the new tax rules come in fully in 2020/21 - Ill be earning around 49k per year profit (in the governments eyes).
Really its about 38k per year profit as unlike the goverment I don't feel that what I pay for mortgage interest is profit. So im left with 38k but they gov think I earn 49k (just below the new 50k tax bracket) ok fine.
Anyway so im wondering, what would you plan to do next if you were me?
Im only 28 and don't have a main job - just property income. Because im not degree qualified the max I can earn from a 'salaried job' is around 22/25k. Which if I got Id have to pay 40% tax on.
For example: say I earn 22k (minus 8800 -40% tax) would leave me with 13,200 per year /52 weeks / by 5 days = 50 quid a day working 8 hours a day plus around 1 hour travel time. So you can see now why I probebly wont bother.
(Basically I could just walk 4 dogs a day for around 50 quid cash in hand (off the books) which would result in the same income as a 'on the books' 40% taxed 22k job! Plus Id only have to work around 1 hour a day to get the 50 quid walking dogs rater than the usual 9 hour day.
Now obviously Im pleased Ive done well with property investing and making 38k a year from that is great! But Im thinking what do I do after?
The propertys I have are managed mostly for me so I dont need to do much.
Theres no point in me getting a standard job (reasons above).
So im looking for ideas on what to do next?
My ideas are
1) Do cash in hand jobs e.g. dog walking, painting, a bit of plumbing etc (Please no debates about morality of cash in hand)
2) Continue investing in property but in a LTD company knowing that I can create a valuable company but knowing I cant really take much out of it without getting taxed to hell. (until im a pensioner anyway).
3) A combination of both.
4) Use my freedom from not needing to work to study something new e.g. trading stocks / currency trading.
5) Open to ideas - what would you do?
Wow Greg! That is a fantastic life you have there! For 28 years of age you are doing great! I have just started investing and a company will be managing all my property, so far I got 2, the plan is to get 5, three bedroom Family Lets.
If I were you I'd go and learn some more skills in property, maybe consider starting a dog walking/grooming business? Or just enjoy travelling much more and doing the things that you enjoy and keep you healthy like going down to the gym
Choice and freedom are my main reasons for investing in property! Another route is to just start a LTD company but as you say withdrawing income could be restrictive. Why not talk to a good Accountant? Very best wishes!
You could start a non property related business in a Ltd Co structure trading goods and services. As you clearly don't need the money you wont need to draw an income from it, so you can simply let the profits roll over year after year. The only tax you will pay will be Corporation Tax. You could elect, if you want, to pay money into a pension from this income. You could also draw a £2k dividend every year tax free.
After a number of years (of which you can decide), you can claim entrepreneurs relief and take the entire pot - less 10% tax and some minor fees - cash free!
If in your position at 28 I think I would look to add to my knowledge- do a degree, learn to paint, photography course, tour guide, etc etc
Perhaps invest money on improving your properties?
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Thought about that, theres not much I can do as their all mid terrace houses - basements already converted etc
Content removed. Asking for exachange of ideas.
Coming soon Investorsk8.com
Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs.
Im willing to parcipate. Also I wouldn't be looking to be a stockbroker (why would I want to be an employee again after getting out of the rat race) but I could quite easily trade stocks just for myself
if you are still up for some ideas
shoot me an email at mybrand 365(at)g mail( dot) com
You are in a very fortunate position.
Remember that the single best investment you can ever make is in yourself. If I were in your position, at your age, I would enrich my mind. Whether this would be by education (learn some new skills, do a degree, learn a language) or even by travelling the world. If your properties are as easy to manage as you say, chances are you could manage what you need from a beach in Colombia, from a beautiful village in Mexico, or from a City in Argentina.