Some notes based on your comments below:
No CGT if bought in a Ltd Co, just Corp tax as we're all already used to.
The 15 companies rule is not as you have read it, and it's changed to 6 properties now. It's about buying 6 properties in one go, which will avoid the SDLT surcharge. This is still in consultation. The objective for this is to encourage large, corporate style rental businesses to thrive whilst choking off the small investor and the people that want a couple of BTLs for their retirement.
Beware of HMOs. This is not a new strategy; it has been around for many years and the property 'gurus' have been there and done it and now sell courses to teach others how to do the same, i.e. they make money from handing off the training more than they do from their properties. There is a vast oversupply of HMOs in a number of areas already.
Still, in some areas HMOs might work, especially if you're up North where is more LHA demand. Buy cheap 3 bed-terraced houses with 2 reception rooms that you then rent as either 4 or 5 rooms. You'll need to avoid Article 4 areas (restriction on multiple occupation) and loans will be commercial rather than residential (hence a little more expensive). You'll have to manage a higher turnover of tenants, and also spec the house out to be HMO compliant - fire doors, wired smoke alarms, lockable doors, sufficient bathrooms/kitchens etc. You will also be liable for all bills on the property. Your numbers should be based on an 80% occupancy rate. BUT, having said all that, you can make a decent return, for example, £130k 3 bed in Kettering can get £1,600 to £2,000 monthly gross income. And that's not even far up North.
Don't mix your IT business with Rentals in the same Ltd Co. Use a separate company but be aware of the Affiliated Companies rule.
And yes, MF is a millionaire, but it means bullcr@p because its never enough and none of this money is real and none of it will make you any happier or go with you to the other side when you're 6 foot under.
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Reply to: First property on LTD
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Previously on "First property on LTD"
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Originally posted by diseasex View PostIf i bought property on my limited and it would be LTD's first property I wouldn't pay 2% additional tax after april? Anyone understands this?
Again, I'm not sure, but that's a possibilite gotcha to bear in mind.
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Originally posted by diseasex View PostI won't be interested in value change as it will be hmo rented out... You not necessarily need to buy them in london, there are way cheaper areas
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Originally posted by MrMarkyMark View PostVery, very, ambitious....
[SIZE="6"][COLOR="red"]Still, houses can only go up rather than down
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Originally posted by diseasex View PostAfter that gig in london ill be buying new HMO every 2-3 months.
Still, houses can only go up rather than down, invest heavily in the Gidiot Ponzi scheme.
You will, forever, be a winner
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Originally posted by MrMarkyMark View PostThe OP only has another 14 to get, then.
Fill yer boots
HTH
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Originally posted by SueEllen View PostI was reading in the Times that you need to put 15 properties in a company to make it worthwhile.
Fill yer boots
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I was reading in the Times that you need to put 15 properties in a company to make it worthwhile.
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Originally posted by Iliketax View PostThe consultation documents suggests that the 3% extra SDLT would be paid by a company.
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Originally posted by diseasex View PostIf i bought property on my limited and it would be LTD's first property I wouldn't pay 2% additional tax after april? Anyone understands this?
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This is a good question and TBH I don't know the answer just yet. As a separate legal entity, you would think that the Ltd Co is distinct from you personally, so that if you already own property personally then the first one in the Ltd Co would not be subject to the additional 3% stamp duty (not 2%!).
There has been a fundamental shift in the taxation of rental income due to Osborne’s very poor decision making based on a 22 year old’s economic report. This will lead to tax being liable on gross income [rather than profit] and in some cases even on losses in rental businesses, due to the removal of higher rate mortgage interest relief on BTL investments. The proposed implementation is deeply flawed and hence has given rise to a challenge by way of a Judicial Review.
Anyway, the point I will make here is that there are now real business reasons to run BTLs through a Limited Company, because you will be able to offset loan costs against income, leading to fair and correct taxation [on profits]. Alternatives are to own the property personally and use a deed of trust to run the rental income through a Ltd Co that manages the properties for you. These are all options that will suit those with higher debt ratio on their portfolios, many of whom are the new no-money-down-get-rich-quick types and probably shouldn’t be risking so much in the first place; personally I’m not a fan of them and I think most will suffer because they don’t never really ‘own’ much of their ‘business’.
For those who work hard and invest over the long term, pay off their BTL mortgages and build equity rather than debt, then you won’t be hit so much by the mortgage interest tax changes. Still a sting because you’re paying more tax for no reason, but little you can do about it. The 3% stamp duty is painful but again, unless you’re buying more than 6 properties in one go there isn’t anything you can do about it except negotiate the price down or include the 3% as part of your trading costs.
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