Pension or buy-to-let?

[Cyberman]

How is it tax free?

tim

... because your savings offset the mortgage, so you are not paid interest and therefore there is no savings tax to pay. If you kept your savings separately then you would have to pay savings tax at your highest marginal rate.

[TykeMerc]

How is it tax free?

tim

Money invested into an offset mortgage savings account doesn't get paid interest, but it cuts the amount of the mortgage capital that attracts interest. In effect you're getting the mortgage interest rate paid on your savings, but not as income so there's no income tax due.

Tax efficient, tidy and a reasonable return if the house prices aren't falling.

[tim123]

Money invested into an offset mortgage savings account doesn't get paid interest, but it cuts the amount of the mortgage capital that attracts interest. In effect you're getting the mortgage interest rate paid on your savings, but not as income so there's no income tax due.

Tax efficient, tidy and a reasonable return if the house prices aren't falling.

the capital gain is still taxed (which is what I was referring to)

tim

[TykeMerc]

the capital gain is still taxed (which is what I was referring to)

tim

Ah, yup if it's not a "primary" residence yes it will attract Capital Gains tax, but as proven by so many MP's recently that's easy enough to avoid by a little Flipping.

[d000hg]

Son is , hopefully, off to University next year and we are thinking of buying a btl to give him somewhere to live and rent out space to other students.

Well that changes everything... after 3-4 years even if you lose a bit, you've helped your son which is a big plus on the non-monetary side of things. And, it might end up earning you a nice amount.

[tim123]

Ah, yup if it's not a "primary" residence yes it will attract Capital Gains tax, but as proven by so many MP's recently that's easy enough to avoid by a little Flipping.

Not if it's rented out. You can only filp between houses which are genuinely "available for your use"

tim

[TykeMerc]

Not if it's rented out. You can only filp between houses which are genuinely "available for your use"

tim

That's easy enough if one of your family are resident there for a short period while you "flip".

[b0redom]

I can't see them stealing property. Then again....

What? Like they did with Northern Rock + Bradford & Bingley shares?

[expat]

Ah, yup if it's not a "primary" residence yes it will attract Capital Gains tax, but as proven by so many MP's recently that's easy enough to avoid by a little Flipping.

If you are not an MP it would be better not to try this at home. Crimes for which we would face repayment, interest, penalties, and jail; they think are all fixed by promising not to do it in future.

[tim123]

If you are not an MP it would be better not to try this at home. Crimes for which we would face repayment, interest, penalties, and jail;

Not at all.

Subject to the "available for your use rule" you can "flip" (nominate) your PPR (Principle Private Residence) to any property that you own, at any time.

There is no need for you to live in it for the majority of that time, or even a substantial period.

What the MPs did was completely legal, using rules available to everyone in the land. ISTM that what they did was no bigger a deal than a Labour MP sending his kids to a private school (I.e it was politically embarrassing, but no more).

tim