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Im thinking of Buy to Let and need advice please

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Martint999

New Member
Since being given notice of redundancy have been looking at buy to let. However Ive now been told I can keep my job, well for at least another year anyway but this has made me think of the future and Ive always had a passion for property.

Im looking at starting a BTL portfolio and whilst I have some savings this is not enough but do have lots of personal home equity. I live in Berkshire which is expensive so could only afford to buy somewhere a good hour away from me but would still want to manange the property to keep costs down

Ive been doing lots of reading and maths but I cant seem to make the sums work, maybe they dont and Im looking for something that will never be a reality for me (long term Id love to quit my job to manage a portfolio)

Anyway first question. If I take out a re-mortgage on my house to raise a deposit on a BTL is that tax deductible, or is only the actual mortgage payments on the BTL property deductible?

I am a Higher Rate Taxpayer at the moment and my wife is Basic

Where we are looking rental is about £650PM, property value £120K and mortgage £90K
Cost of finance to raise £30K deposit about £190PM (repayment)
Cost of I/O BTL mortgage balance about £130
Basic rate tax on £7800 of annual income about £100pm

I have not taken off any other deductions or counted any other expenses such as insurances etc. But it doesnt look like there is much left over.

Also whilst one property would keep my wife in basic tax, another one would push her into HRT therefore increasing the tax bill to about £230Pm (if my sums are right, leaving practically nothing over to build savings.

Ive also looked at an SPV but the sums dont seem to change much.

I know its a long post but am I missing anything. Is the fact that I have to raise deposit finance in the first place killing my chances?

Appreciate any response

Thanks
 
BTLdataGuy

BTLdataGuy

New Member
You are asking some very big questions. caveat: I'm not a tax expert, just somebody who's done some research.
With refinancing your property, the easiest thing is to talk to a buy to let specialist like Charles Louis in Manchester and from there you could submit an agreement in principle to a panel of lenders who will come back to you with their lending options. what I don't know: whether lenders will allow you to reinvest your equity into another property investment. My guess is they probably will.
Cash from a remortgage is proceeds from a loan, therefore it's not taxable.

As a higher rate taxpayer... Talk to your tax adviser et cetera. It's sensible to purchase a buy to let property in a limited company name for tax reasons.

Is it worth having a buy to let property?
If you're interested in buy to let for net cash income, then it doesn't make sense. However, if you are buying for a mixture of moderate cash return and probable capital gain, that's a different story.

if purchased in the right area, your property would typically get four times the return from capital growth as you would from net income.*

Net income: renting your property out with one-month void period per year
 
S

ScotJohns

New Member
Besides the service you mentioned above, you need to understand the mechanism of *bad credit score*. Usually, a bad credit score doesn't mean that you cannot get a small loan from the bank. So with this information, you understand now that you can easily have a small loan (500-1000$) from the bank. Today, you can find many combining loan services, like this one https://www.yhdistalaina.com/jarjestelylaina/, that help you gather the small loans of $1000-500 into one big credit of 50000$. With this mechanism, your credit score doesn't matter, and you can take the required amount of money fast.
 
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marksrill

New Member
Did you verify it? or you just share it form other resources?
 
E

Elo Stew

New Member
You are asking some very big questions. caveat: I'm not a tax expert, just somebody who's done some research.
With refinancing your property, the easiest thing is to talk to a buy to let specialist like Charles Louis in Manchester and from there you could submit an agreement in principle to a panel of lenders who will come back to you with their lending options. what I don't know: whether lenders will allow you to reinvest your equity into another property investment. My guess is they probably will.
Cash from a remortgage is proceeds from a loan, therefore it's not taxable.

As a higher rate taxpayer... Talk to your tax adviser et cetera. It's sensible to purchase a buy to let property in a limited company name for tax reasons.

Is it worth having a buy to let property?
If you're interested in buy to let for net cash income, then it doesn't make sense. However, if you are buying for a mixture of moderate cash return and probable capital gain, that's a different story.

if purchased in the right area, your property would typically get four times the return from capital growth as you would from net income.*

Net income: renting your property out with one-month void period per year
I think, he's right.
 
K

Keith85

New Member
Since being given notice of redundancy have been looking at buy to let. However Ive now been told I can keep my job, well for at least another year anyway but this has made me think of the future and Ive always had a passion for property.

Im looking at starting a BTL portfolio and whilst I have some savings this is not enough but do have lots of personal home equity. I live in Berkshire which is expensive so could only afford to buy somewhere a good hour away from me but would still want to manange the property to keep costs down

Ive been doing lots of reading and maths but I cant seem to make the sums work, maybe they dont and Im looking for something that will never be a reality for me (long term Id love to quit my job to manage a portfolio)

Anyway first question. If I take out a re-mortgage on my house to raise a deposit on a BTL is that tax deductible, or is only the actual mortgage payments on the BTL property deductible?

I am a Higher Rate Taxpayer at the moment and my wife is Basic

Where we are looking rental is about £650PM, property value £120K and mortgage £90K
Cost of finance to raise £30K deposit about £190PM (repayment)
Cost of I/O BTL mortgage balance about £130
Basic rate tax on £7800 of annual income about £100pm

I have not taken off any other deductions or counted any other expenses such as insurances etc. But it doesnt look like there is much left over.

Also whilst one property would keep my wife in basic tax, another one would push her into HRT therefore increasing the tax bill to about £230Pm (if my sums are right, leaving practically nothing over to build savings.

Ive also looked at an SPV but the sums dont seem to change much.

I know its a long post but am I missing anything. Is the fact that I have to raise deposit finance in the first place killing my chances?

Appreciate any response

Thanks
It's admirable that you've set a goal of creating a portfolio. However, in these turbulent times, it's important to exercise caution. When you're first learning how to build a property portfolio in today's market, it probably makes sense to keep your investments local. Why? You'll gain a better understanding of the local property market and be able to identify any discrepancies or bargains far more quickly than you could with your current portfolio if you do this. You'll gain local knowledge while also saving money by using the same contractors, agents, brokers, and so on for all of your properties. This is because you can negotiate fees and costs if you use the same people for all of your properties.
 
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bernetec

New Member
The process of renting a home in the UK is not so simple. Renting a room is a very common option for solving the housing issue. First of all, of course, because of the high prices for apartments. And fewer documents are required for this: no bank statements are needed, and recommendations are not always needed. Perhaps this is the option that will suit you. When they moved to London, my friends paid attention to the house capital when they chose real estate. In the event of a breakdown, most of the amount will be allocated from this reserve. For example, in the USA, half of the households have more debts than cash reserves, so you must approach the housing choice carefully. In Europe, you are not in danger of this.
 
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