Landlords Have been Given a Huge Tax Windfall

It’s hard to believe this but thousands of property investors were among the winners from yesterday's pre-Budget report, after the Government unveiled plans to slash the rate of capital gains tax from 40 to 18 per cent.
Currently, higher rate taxpayers are taxed at 40 per cent on any gains above £9,200 in any one tax year – although using taper relief, this rate can be reduced to as little as 24 per cent on assets held for 10 years or more (or 12% for lower rate taxpayers) .
CGT hits residential buy-to-let landlords who sell their properties, as well as wealthier individuals who realise capital gains when selling any type of share investment.
But from 6 April next year, all capital gains above the personal allowance of £9,200 will be charged at a flat rate of 18 per cent – while taper relief (and the old indexation relief for pre 1998 purchases) will be scrapped.
And this applies retrospectively, so if you are a higher rate taxpayer (and for those lower rate taxpayers who bought less than 4 years ago), the best thing to do if you are thinking of selling now is – don’t. You are best selling next year after April 6 when you will pay less a lot less CGT.
Many individuals will no longer need to hold on to their assets for many years to minimise their tax.
I can hear a gnashing of teeth from some of my good friends who think landlords should be taxed harder (including the Institute of Directors and the Guardian newspaper) who say that landlords should be taxed more not less – including having their ability to set off interest on loans for buy to let property as a cost - removed.
If you need detailed advice on property or buy to let generally ask me.
I’m David Lawrenson from property investment advisors http://www.lettingfocus.com/
I’m the author of the UK's top selling property investment book
I’m a speaker on property investment issues and a freelance property writer and I contribute to newspapers and a host of property websites, write a property investment blog and run a landlord mentoring service
You can read more of my landlord blog and details of my networking, advice, property mentoring programme at my website http://www.lettingfocus.com/
My next London property networking meeting is on November 14th. Click here for details: Property Investment Seminar
What’s unique about lettingfocus.com is that we offer independent property investment advice because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2007. This blog is updated at least twice a week

Can I Avoid Tenancy Deposit Schemes by Asking for More Rent In Advance?

I’m going to be writing a few articles about tenancy deposit schemes in the next few weeks here on the blog.
Just as a reminder first, all NEW assured shorthold tenancies which started after 6th April 2007 in England and Wales where a landlord takes a deposit should have the deposit protected in one of the three tenancy deposit schemes the government has set up. There are fines for not complying and you cannot evict under the so called accelerated possession route.
There is lots more about this in “Successful Property Letting – How to Make Money in Buy to Let” and on the net.
Now lots of landlords have asked me, "Can I not just take two months rent in advance instead of one month and not bother with protecting the deposit in the scheme?"
Well, the answer is yes. There is nothing wrong with doing this. In effect, the tenant will pay over the same amount of money at the start.
However, the big difference is that a landlord won’t be protected against damage in the same way as he would if he had taken a damage deposit. This is because the money paid by the tenant would have been rent and as such, cannot be used to deal with damage disputes or disputes or about what was in the inventory etc.
So, in this scenario, in a six month or 12 month tenancy the tenants will just pay no rent in the last two months because they don’t have to – as it has already been paid in advance.
But if they leave the property in a mess or have lost items that were on the inventory, then the landlord will have no money to cover the losses.
So, whilst a landlord doing this has done nothing wrong, he does significantly increase the risk that the tenants will leave the property in a mess because they have no risk of losing their damage deposit hanging over them when they leave.
Deposit schemes are quite complex. If you need detailed advice on tenancy deposit schemes or landlord and tenant problems generally ask me.
I’m David Lawrenson from property investment advisors www.lettingFocus.com
I’m the author of the UK's top selling property investment book
I’m a speaker on property investment issues and a freelance property writer and I contribute to newspapers and a host of property websites, write a property investment blog and run a landlord mentoring service
You can read more of my landlord blog and details of my networking, advice, property mentoring programme at my website www.lettingfocus.com.
My next London property networking evening meeting is on Wed November 14th. Click here for details: Property Investment Seminar
What’s unique about lettingfocus.com is that we offer independent property investment advice because unlike most people in the buy to let and property advice business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from any of these sources.
If a property investment is lousy – We’ll tell you straight and we will tell you all about buy to let and property investment - the good and the bad and we won’t make silly promises that you’ll become a millionaire overnight.
Copyright: David Lawrenson 2007. This blog is updated at least twice a week