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Found 256 results

  1. Hi My wife and I are in the process of starting our portfolio with 2 BTL properties. I pay income tax at the basic rate and my has no income at the moment. Would it be better to own the properties in a limited company at this stage or keep them in our own names until we add more properties? Thanks WS
  2. Hi All, I wonder if anyone can advise on the rules when it comes to renovating a property after purchase and offsetting some of those expenses against tax. It was always my impression after reading a few books and articles on the subject over the years that we would not be allowed to claim for ANY expenses incurred whilst renovating or preparing a property before it was let for the first time. This last year however, after being bombarded with emails from HMRC, I decided to brush up one what's allowed using the Inland Revenue resources and that seemed to suggest that any expense was allowable so long as it was maintenance and not an improvement. So for example if I buy a house which is perfectly liveable and in a condition which would easily rent but I decide to decorate top to bottom first before I let it out can I then claim those decorating expenses and off set against tax? What I read seemed to suggest that was allowed but I have never claimed that in the past thinking that nothing was allowed up until the point I first let the house out? Can anyone confirm? If it is allowable expense does that then stretch to renewing existing shower for example or kitchen worktops or getting the boiler up to standard and replacing radiators like for like? The inland revenue advice seemed to suggest that any like for like replacements could be claimed as long as you weren't for example fitting a shower where there wasn't one before or making the kitchen bigger or fitting central heating where previously there wasn't any (improvements). This would potentially make a nice difference to our tax bill but having never claimed it before it seems almost too good to be true (ie fair!). Have we been doing it wrong or have I misinterpreted the rules?! Would really appreciate if anyone knows for sure and be interested to know what other people are doing? Thanks in advance!
  3. Does anyone have a spreadsheet to share that will help me calculate tax to be paid at the end of the current financial year? Ideally this will allow me to input salary, BTL income, expenses etc. I am keen to work out as the end of the financial year approaches, any additional pension, charity contributions I can make to reduce payable tax. Thanks
  4. Hi, Some advice would be greatly appreciated. My family & I are discussing estate planning between my Sibling & I. We have a fair piece of property that could be split up into two independent premises There is a HOUSE & a commercial premise. There is potential to modernize & we potentially have some capacity to put that modernization in Train. THE question, is there a real need to complicate things too much? Under the parameters of inheritance, the limit for two children (would suggest that we would be relatively safe from CGT on sale From what I understand the HOUSE could be modernized incorporate 2 flats a flat each make the flats our main residence then subsequently leases 1 room out each. Then the commercial building an idea could be to lease the premise trough a newly formed company by my sibling & I, then sublet the premises to a third party. THE main thing I believe to avoid is the incorporation of the buildings into a LTD Co. YES? Or lease the commercial building to a third party, the rent would be split & the tax rate would be calculated given our salaries, YES? ANY tips, I thank you for viewing.
  5. So looks like the ball has started rolling on the expected tax grab needed to pay for this pandemic mess. Sunak has clearly voiced property transactions as an area that escapes CGT when compared against income tax brackets. He has clearly called our second home owners. Now in my view this is going to massively effect the plans of those that are coming towards their investment journey / looking to sell up. For those who are planning on being in the market for the next 20years and potentially beyond - is it fair to say that you shouldn’t base your long term investment decisions based on today’s CGT rules as surely these will change and evolve over time anyway?
  6. Anyone got any experience of setting up a declaration of trust, or currently have this set up..with an understanding of how this effects your borrowing abilities? want to set up declaration of trust in favour of my wife 99vs1%. Can we still have joint mortgage or not? Thanks
  7. Hi all, I have an arrangement with a family member whereby the property was purchased by my sister and essentially "verbally gifted" to me to help me onto the property ladder. We are currently in talks of several scenarios in order to extract the equity/cash from the property in order to help me to build my portfolio. One potential case would be to sell the property and cash in on the current value; apart from the initial capital gains tax, are there any other law/tax penalties we should aware about if she was to transfer a lump sum to me following the sale of the property to fund my property portfolio? Would the situation be further complicated if I was to consider starting a limited company to build my portfolio using the cash received from my sister? Any insight in terms of the most cost effective (and legal) way to do so will be much appreciated. I'm just concerned whether a gift of this magnitude is acceptable in terms of putting a deposit payment on future BTLs in my own name/limited company. Thanks. Kind regards, Rayman
  8. Hi fellow Hubbers! We have just got started on our property investment adventure. We are nearing exchange on our first 2 properties which we are buying as individuals, as I currently have about 25k before I hit the higher tax bracket. My husbands income sits just below the higher level. We are purchasing both properties as tenants in common with a 99/1% split. Our solicitor (online conveyancer) has quoted an extra fee of £400 + VAT to prepare our deed of trust for each property to ensure that any benefit from the properties is split equally between us. However having looked online I have found that we can prepare one with RocketLawyer.com for a fraction of the cost (in fact first one for free!) and complete the form 17 ourselves too. My question is - are we being a bit tight trying to save £1000 by doing this ourselves and possibly missing something important and leaving ourselves open to possible future problems? Has anyone here used these online document services before or got any advice for us? We surely can’t be the only ones to have been in this situation. I’d really appreciate your thoughts. Thanks Pip
  9. Hi, I currently have a ltd company and am considering opening a company to invest in property with a medium term goal of adding properties with the cash generated rather than for immediate additional income. The long term goal being to use the income generated from multiple properties to replace the day job. To fund the initial purchase I am considering lending the new company money from the existing company at the prevailing market rate. Would mortgage companies be ok with this and where is the best place to compare LTD CO BTL Mortgages?
  10. My long term girlfriend and I have been looking for a route onto the housing ladder. My girlfriend’s Dad owns a commercial premises on which he runs a profitable laundrette from. He also owns the freehold to the first floor which has separate access and is currently being run as a 3 bedroom HMO. Long story short, the property is well suited for a loft conversion / extension, next door have already done this a few years ago. My girlfriend’s Dad has agreed to “gift” us ownership of the proposed 2nd self contained flat should we fund the works. The works would comprise a small ground floor extension to the business coupled with a light refurbishment, first floor reconfiguration within the existing footprint and a second floor loft conversion. The first floor is currently very dated and a complete refurbishment with a better layout would increase the rental income massively. By day I am a QS and comfortable with the planning and construction aspects of the project. The construction works will cost in the region of £100k-£130k depending of scope and final specification. My girlfriend and I plan to raise the capital from a family member who will release some equity in one of their properties. We will then repay them at full cost plus additional interest. Up until now, it all seems fairly straightforward, however this is where it gets a little complicated. The approximate financials of the project: All in construction costs (including fees): £130,000 Cost of borrowing (from family member): +/- £7,000 This next part is on my to do list in the coming week, I have been meaning to take the plans to a few estate agents and see if they will do a desktop valuation of the proposed plans. At this stage, all I can do is compared to the current market. This property is based in Teddington, London, comparable 1 bedroom flats, just across the road are selling for £330,000 (these are about 15m2 smaller than our proposed flat). To show the feasibility of the projects financials I will assume a final appraised value of £250,000, which is way under what I anticipate the value to be (anyone who knows the areas, will know 1 bedroom flats rarely appear for less than £300,000). Total spend: £137,000 Final appraised value: £250,000+ We would then mortgage the flat after 6 months at the appraised value of £250,000 +/-, using a 60% LTV mortgage. Meaning we would maintain 40% equity (approx £100,000) and release 60% (approx £150,000). This £150,000 will be used to repay our total spend to the family member. Should the appraised value be more and we manage to release more equity, this will be used to begin our property portfolio under the ‘buy, refurbish, refinance’ model. We are currently facing two areas we need some advice on. Question 1: My girlfriend’s Dad owns the property in question as a second home. Once the works are complete, we need to figure out the best way to transfer ownership (the new lease hold) of the second floor flat from my girlfriend’s dad to us! I understand we could be facing capital gains tax and I know there can be issues when gifting a property. I am looking for any tax experts who may be able to recommend the best way to go about this handover? Question 2: As mentioned previously the existing property comprises of a commercial space on the ground floor and HMO on the first floor. The proposed second floor flat which we plan to own and mortgage will be above both the commercial space and HMO. I am aware that when it comes to getting a mortgage on a property above commercial space you are faced with far fewer mortgage options. This is why in the calculations above, I have opted for a 60%LTV mortgage as my gut feeling is this would open up more mortgage options, if we can get a lower LTV, we would probably go for it. My concern is that for whatever reason we may not be able to get a mortgage at all on the second floor flat. Can anyone see a reason why this would be the case? If so, who would be the expert to consult, I am assuming a mortgage broker?
  11. Hi, A bit of a complicated question but need some rough guidance. I'm looking at a 3 storey property that's for sale in a unfinished condition. It was a small 4 bedroom split into 2 flats that were being rented out. The current owner has let it fall into disrepair and had it structurally condemned in order to force the council to grant planning permission for a larger rebuild which would create 6 bedrooms split into a lower 4 bed and upper 2 but is clearly designed to be further split into 3 once built. They are now looking to sell for £500k with that planning permission in place. I would like to do something different and it would be my first and primary property but I might have to go with the granted planning given that it is an article 4 area. Assuming the upper flat is worth £400k on completion and the lower £800k there's 3 scenarios: 1. I retain both flats with me living in the larger and rent the other out 2. I sell the whole thing after living in it for 6 months without renting out the 'annex' 3. I just sell the upper flat and continue to live in the lower. For each what would be the tax payable and what structure would be best to follow if I did buy the plot and demolish and build? Would it be best classed as a self build or would I be better having the build costs as expenses in a company? What factors might I be missing? Thanks
  12. Hi guys, Just want to check my understanding as I move towards a transaction. I currently own 2 BTLs but live in rented accommodation as my main residence. We're looking at buying a new place which will be our primary residence. Am I correct that under the new stamp duty rules that I won't have to pay stamp duty under 500k? My understanding is that the 3% won't apply as this will be my primary residence. One other thing that might complicate is that the property includes an annex and a 1 bed cottage that we'll be using for holiday lets. || Thank you!
  13. Would someone be so kind and look at my problem and give me some tips or advice? I wrote it down chronologically to make it easier to get an idea of the case. Fact one. We are residents (in 2012/13 we moved to the UK) – we do not have any property here yet. Fact two. In 2008 we acquired the property in Poland – we have a marital property community (STATUTORY MARITAL PROPERTY PARTNERSHIP). What we acquired is a plot - BUILT-UP PROPERTY 1500m2. On which there were two properties. detached residential house (single-family) with a usable area of 33,46m2 consisting of two rooms, kitchen, and bathroom (built before 1945) and temporary structure – cabin (camping) not permanently connected to the ground. my wife, children and mother-in-law are registered there. Fact three. Now we are in the process of selling it. From what I know I will not have to tax it in Poland because more than 5 years have passed since the purchase. Part of the money from the sale will remain in Poland – as a donation to my mother-in-law (daughter/mother – so tax-free) Our concern. Unfortunately, there is a doubt related to the entries in the Land and Mortgage Register, and thus in the future sale contract. At the moment in the Land Registry, there are records of objects on the plot, which do not exactly correspond to reality. NON-RESIDENTIAL BUILDING, another, floor area about 41m2 NON-RESIDENTIAL BUILDING, another, floor area about 32m2 NON-RESIDENTIAL BUILDING, another, floor area about 39m2 The facts, however, are the same as when we bought (frankly speaking, we do not know where this entry is currently in LR – probably someone from Land and Mortgage Register Department wrote that record from the time before we bought the property). This is of little importance to the person acquiring (after the purchase, they will make appropriate corrections in the Land and Mortgage Register) and it does not matter for us unless it could affect the taxation of the one in the UK (then we will make the correction in agreement documentation). And here comes a question to you: Will we have to tax it in the UK after the sale? What are the legal and fiscal implications of this sale on us in the UK? If the non-residential building is included in the sales contract (the current provision in LR) could it affect the Capital GainsTax? When we want to buy a property in the UK for the money we get, can it have an impact on taxation in the UK by providing the source of the money after the sale (with the current entry in LR)? Could someone suggest anything? I'm stuck in a dead-end or maybe I'm asking the wrong questions. Thank you in advance for your reply. Kind regards Marcin Przepiorka
  14. Hello Everyone, I am working out my tax return calculations and wanted some clarification on the mortgage interest relief. I have worked out that when including my non property income, rental income and mortgage interest and deducting the other costs I have, I am still in the basic tax rate bracket as the sum total is under 50,000. With that in mind does that meant I am still able to claim back all of the mortgage interest as I have not been pushed into the higher tax bracket? Thanks
  15. Hello, I am a new investor and understand you can take £3k out of your limited company into your personal name / year tax free as a dividend. I have three questions relating to this. 1. really I would like to continue building money within the company to invest in further buy to let properties. Therefore is it possible to take the £3k from rent/ year and immediately re invest the money as back into the company so that you could take a tax free lump sum in the future as this would in effect be your company returning the money you lent it? Ie. The same as you can remove your initial deposit tax free 2. If there is another person with significant control who owns the other half of the company can they also take £3k as a tax free dividend and probably in a similar way? 3. What paperwork do you need to show to do this? Is it a letter from the director to the share holder to say the terms of the loan and so on? Thanks very much for any help that you can offer!
  16. Hi All, I am new to Property Hub. I am about to purchase my first BTL property. I am a UK citizen however have been working outside the UK since 2014. I have read up quite a bit about Section 24 and other tax on landlords / BLT income etc. however have not been able to find anything that reflects my situation. I do not have any earnings in the UK or EU and therefore am not paying any income tax. I have also completed a P46 upon leaving the UK registering myself as no longer living in the UK. I want to know if I be liable for tax on my BTL earnings if they are in a personal name? Also what would the threshold be before I start paying tax and what are the triggers that lead to taxation for someone in my situation? Thanks in advance for any advice received.
  17. So I currently own my own home where I have been living for 4.5 years which I was lucky enough to buy myself (saved by living with parents). My long term partner (not married) has just agreed to buy a new home for us to move into which will be an upgrade for us both and this will be in her name (until married). I now have the fortunate option of what to do with my property (Paid 178k now worth approx 210k - 2 bedroom on South coast). My first thoughts is to rent out my property but given my circumstances obviously the property is not within a limited company and I am just on the edge of the higher tax band 40% with my full time job. I guess I am trying to figure out the most cost effect / tax effective way to let out my property given these circumstances. Should I try to transfer to ltd company or just keep it private ? Be interested to hear your thoughts. Long term I would like to save up for another deposit on another property. I can’t release capital from my current property to do this as have to have 25% LTV for a buy to let mortgage (Just over 50K currently). Thanks in advance
  18. Hi All, I have been quoted £77+VAT a month for a property accountant for the accounting of my SPV, which will hold 1 buy-to-let property (for two years). My first question, is this a good rate? My second question is, is this value for money as I will only have one property? Or would I be best served paying a property accountant once at the end of the financial year to complete the relevant company tax documents? Thanks in advance, Joe
  19. Hello, I am wondering if the sourcing fees (and additional mortgage lender fees, mortgage broker fees, solicitor cost etc...) spent during the acquisition of a property can be deducted from the CGT bill when the same property is being sold? I am aware of SDLT being deductible but not sure about the lender/broker/solicitor/property sourcing fees. Thank you in advance for the advise. Regards Antoine
  20. Hi All, I'm just starting out near Cambridge and am looking to build my team to help me along the way. I'm looking to do some conversions, so will be needing: 1. Planning consultants 2. An architect 3. An innovative mortgage broker 4. A tax advisor / accountant with good property knowledge. We've really struggled to find reliable people when doing our main house, so Any recommendations or notes of those probably best avoided would be very gratefully received! Thanks All, appreciated!
  21. Hi everyone, I am hoping for some feedback/guidance/advice on a strategy to pass a portfolio of mortgaged properties to my daughter in the future, who is currently two years old. The idea is to build up a portfolio of properties that my wife and I will use to fund our retirement (15-20 years away sadly), but of course would want these to be passed to my daughter with the minimum amount of tax payable. The plan is to set up a Ltd company and have multiple share classes, A class - management/voting, B class - asset ownership only, C class - rights to revenue/dividends. I've read that i can slowly gift the B class shares to my daughter, and assuming (and hoping) i live seven years after that, avoid any inheritance tax but also use "holdover relief" to avoid any capital gains, as i understand the gain is then passed to my daughter and is only payable if she sells the properties. So would it be best to start gifting shares to my daughter sooner rather than later, before the company has any real value (can a minor own shares in a limited company?) and generally speaking, does this sound like a viable strategy? Any guidance and direction on anything i have likely missed would be great! Thanks
  22. Hello, I own 3 HMOs through my limited company. As they are HMOs, my company needs to pay for the utility bills. To be able make the utility related expenses Tax deductible, should I register these utilities as Business/Commercial energy so that the bills are under my Limited company’s name? Or even if I register the utilities as domestic under my personal name (Company director), will they still be tax deductible? The business energy rates are considerably higher than the domestic ones, but I don’t want to have any problem with the tax calculations. Thank you in advance Volkan
  23. Hi all, I have two rental properties that I have owned for some years and now live abroad in Luxembourg. Due to the ongoing changes in UK property tax, does it make sense to set up a UK limited company to manage the income from the BTLs? Thanks for any advice on this! Andy
  24. Hi My wife and I are looking to convert the house we live in and own to a rental property (our first one) and move into somewhere bigger as we are starting a family. Is additional 3% stamp duty due on the new house we are buying? Is there anyway I could sign full ownership of our current house to the wife and I buy the new one in my name so we are not considered to have 2 houses and thus liable for the extra tax? Is it possible to pay the extra tax if we have to on the value of the smaller cheaper house we currently own instead of the more expensive new one? Just looking at ways not to shell out an additional £12K with our first baby on the way and the wife reducing her hours at work. Any advice would be much appreciated! James
  25. Hi I do all the admin for a single property my partner owns and lets privately and i'm just trying to make sure i'm looking at things correctly. It was his residential home previously. In preparation for letting it, many repairs were done in the months beforehand. New kitchen as the existing one was handmade. New boiler as the existing one was 27 years old. Refresh of decor and flooring etc. It was in a livable and lettable condition, but as he was going to be moving far away, he wanted to make the property as reliable as possible. The boiler and kitchen were large jobs as the location and pipework of the boiler did not meet modern regulations. The layout of the kitchen remained the same, but in order to access the gas pipes to replace them with the correct ones, the handmade units would have broken apart whether we had intended to replace the kitchen or not. He also had to replace the freestanding electric cooker twice as the original only had one of the two ovens working and then he accidentally smashed the ceramic top of the first replacement while doing other work, requiring another one. From reading other threads I concluded that these would be allowable under revenue costs rather than capital (please advise if this is not the case). Some of the large costs were incurred in the 18-19 tax year, but were undertaken specifically for the purpose of getting the property ready to let from April 2019, but, due to an unexpected delay in the purchase of the onward residential property, wasn't able to be remortgaged to an interest only BTL until July 2019 and let until August 2019. His personal self employment income was £31k for 18/19 filed by an accountant as he needed it to be certified for the mortgage applications. He did not have any personal income in the 19/20 tax year until employment in September 2019 and has received his p60 for 19/20 with an income of £12k and paye tax paid of £1200 as some weeks he got a bonus. He undertook associated training and qualifications over July and August 2019 amounting to £2500 in personal employment expenses. My question comes in whether ALL the repair / replacement costs as well as the normal recurring allowable expenses (management & referencing fees, mileage, RLA membership, 20% of mortgage interest ...etc.) incurred leading up to and during the tenancy up to April 2020 should be apportioned to the 19/20 accounts for the property, and if so, the result will be a very large loss (Circa £8000 loss), which makes no difference to his tax liability in 19/20 as he is already below the threshold. Or, can an accountant alter his 18/19 self assessment to include the large startup costs incurred in that tax year, where the allowance will actually have an effect on his tax liability? If not, would declaring such a small self assessment income for 19/20 (overall +£1500 for the year!) negatively affect his ability to remortgage both the BTL in July 2021 and his Residential mortgage in July 2024? His previous SA302s that the mortgages were calculated on were 29k, 30k and 31k from self employment before he relocated. There has been no late payments and no bad debt despite things being a bit tight as most of the expenses were paid from savings. He's currently employed rather than self employed, so would they just take 3 months wage slips and ensure the rent was 1.25x costs at the time of remortgaging rather than looking at the previous tax years? If the negative effect would be worse than the benefit of declaring the loss would it be better to try and switch as much of the expense to capital even though he wouldn't be planning on selling the property for at least 15 years, if ever. Just want to make sure whatever we do now won't cause more problems down the line. Alternatively, is there any way to spread these startup costs across future tax years instead where the allowance would have more of an impact on tax efficiency as working full time for the year 20/21 should have an income of around £23k as his hourly wage went up after 6 months and there will be a whole year of employment. Additionally, there would be a projected profit from the rental property of about £4000 after allowable expenses for the year, assuming no void period. I appreciate there are a few different queries here, but any insights are welcome
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