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Based on the tax regulations that had been in for for over 200 years LL invested considerable sums to purchase a property with perhaps a 75 to 85% LTV mortgage
@Paul Why do keep repeating this untruth? The tax regulations you refeer to have only applied to rental properties since 1963. They were first applied to businesses in 1803 but were abolished along with other forms of income tax in 1816, and were reintroduced in 1842,
Prior to 1963 financial costs could not be deducted at all and you would be charged income tax on the market rent of any property you owneded, whether or not it was let, even your own home. That had not been too much of a problem when the income tax rate was under 10%.
Like other commentators on this one, I have just wound down my Ltd Co (IT Consultancy) that I have been running with my wife for the last 10 years or so.
Did the sums in 2015 and since then we have been raising rents, reducing the mortgages on our own place plus a couple of the BTLs. My first sale will be in March next year (4 tenants will need to find a home unless another LL buys), and then we start a process of selling and consolidating through to 2021 or thereabouts. All happening about 10 years earlier than anticipated but I'm not prepared to pay the incremental S24 tax. I've paid taxes all my life but this one is taking the mickey.
As JC commented, there's a few silver linings:1) No more NI for me or the missus - we have made full contributions and the bu****rs aren't going to get another penny from me!2) My golf handicap is improving3) The missus keeps looking at holiday brochures (not sure if that's such a good thing!)4) The unexpected rental increases have actually given us a bit of an income boost - once I've finished consolidating, I'm not going to reduce my rents so my long term income could be better a lot better than originally planned. The corporate landlords around here are eye-wateringly expensive, and good rentals are in desperately short supply, so I have plenty headroom for rent increases for the next few years5) I have a lot more time to email my useless Tory MP and make life hell for him
I do have cash in the bank, and if I see an opportunity I may well re-enter within a Ltd Co. wrapper. I have sons so I see that as being a potential pension and/or inheritance strategy. I have accepted that it will be less profitable but once I'm unencumbered with existing properties, that will give me another string to my bow.
your a very wise Guy
We all have to face reality and make changes
I think you are correct S24 has brought forward the retirement of some Landlords
But I fear a great number of Landlords outside the pages just don't understand the full implications
so bigger fool them
Learn Change and Adapt ?????
Your responses to S24 could almost be used as a template by other S24 LL
A very level- headed and wise response by you.
It should mean you pay fewer taxes and retire early.
So S24 a bit of a result for you; just the Treasury will miss you and all the taxable income you produced as well as all the trades you used but won't need to so much.
So getting rid of S24 LL will cause a net loss to the Treasury.
Nice one idiot Treasury! !!
You'll be able to toast dopey Osborne for making your life a whole lot better. Well done you!!
It would appear that s24 is a classic example of a bright idea some Govt. grunt comes up with which then creates negative connotations elsewhere. Cause and effect in full motion?
You could easily construct a Yes Minister episode out of a Jim Hacker idea to create S24 with Sir Humphrey eventually slapping the idea down having explained all that you suggest.
If S24 etc had been introduced for all new business I doubt there would have been a peep from the industry.
We would just have accepted it as new rules and adjusted accordingly.
We wouldn't have liked it but we would accept it.
It is the retrospective nature of S24 that we all find most objectionable and basically unfair.
My reaction if I wished to invest would be to do so via a corporate entity.
Many other LL would react the same way.
That wouldn't be the best option for me; but with S24 I wouldn't invest in my own name. .