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  • property portfolio

    I recently aquired £100k cash in a will, now i have been researching the property market for a few years now and I realise that the good rates on mortgages are gone and looking at up to 8% for a mortage.

    My question is this I was looking two years ago and last year at terrace houses 2-3 bedroom which have gone from 80k two years ago, 70k last year and now 60k I realise this is a down turn in the market, but what I want to know is I am looking to buy three houses at 60k putting down £15k deposit on each, looking for between £450-£550 in rent on each. Would it be better in terms of tax to put this through my personal tax allowance, or open a business to off set the tax burden with claiming for everything I am entitled to do?.

    Or even opening a Limited company with a nominee secretary and pay myself a dividend or £100 per week what is the best option for minimising the tax paid?

    I do know the first £4500 or so is not taxed but even at the lower figure £450 x 3 x 12= £16200 - £4500 = £11700 to be taxed at 70-80% or is it the difference between your rental income minus your mortgage and they tax you on that figure?

    I obviously need an accountant to help, but obviously me being a novice at this I would appreciate your help initally.

  • #2
    Definitely need an accountant there. I wouldn't suggest making a decision on advice from this forum without seeking professional advice first.

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    • #3
      Originally posted by andy78 View Post
      I recently aquired £100k cash in a will, now i have been researching the property market for a few years now and I realise that the good rates on mortgages are gone and looking at up to 8% for a mortage.

      My question is this I was looking two years ago and last year at terrace houses 2-3 bedroom which have gone from 80k two years ago, 70k last year and now 60k I realise this is a down turn in the market, but what I want to know is I am looking to buy three houses at 60k putting down £15k deposit on each, looking for between £450-£550 in rent on each. Would it be better in terms of tax to put this through my personal tax allowance, or open a business to off set the tax burden with claiming for everything I am entitled to do?.

      Or even opening a Limited company with a nominee secretary and pay myself a dividend or £100 per week what is the best option for minimising the tax paid?

      I do know the first £4500 or so is not taxed but even at the lower figure £450 x 3 x 12= £16200 - £4500 = £11700 to be taxed at 70-80% or is it the difference between your rental income minus your mortgage and they tax you on that figure?

      I obviously need an accountant to help, but obviously me being a novice at this I would appreciate your help initally.
      I think you really need to do more research into the business of this - for example, you don't pay dividends on a weekly basis, but instead on a quarterly basis at the most, other HMRC may be likely to see the payments as a wage, rather than dividend.

      Also be aware that property prices are expected to fall through next year, and that rental incomes are starting to fall because of a glut of BTL properties on the market.

      I think what you really need to do is write up a sold business plan and use local data on rental needs and income in there, as well as advice from an accountant on how to structure finances for tax management purposes.

      Comment


      • #4
        I think you also need to be aware that:

        It isn't mortage - rent = profit....There are alot of little things that can happen, like having no tennants, replacing doors, insurance or windows etc that need to be factored for

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