introducing steve mears – independent financial advisor the money man
Buy-to-let and second property changes…
“ Stamp Duty
We therefore feel it important that we discuss the many options, recommend an accountant in most cases, and we then try and provide an independent overview of buying an investment property, to make sure you get it right. Here are some ideas to consider: we could switch you to a lower fixed rate deal , if you already own the property. you could place your property portfolio in a limited company structure. You would then pay corporation tax (which is lower) rather than income tax on your profits. A drawback is that your mortgage options will narrow as fewer providers will lend to a company (This may improve soon) .
People purchasing buy-to-let properties (and second homes) now incur an extra 3 per cent stamp duty. This doesn’t seem to have slowed the market much, as we are still busy with enquiries, but it’s now even more important to get good advice . Tax Relief – Buy to Let Up to now, people buying to let have been able to claim tax relief on their mortgage interest payments at their marginal rate of tax. This means that a basic rate taxpayer would get 20 per cent tax relief, but those at a higher rate would receive 40 per cent relief, while top-rate taxpayers could claim 45 per cent. …but now it‘s even more important to get good advice… When the changes come in, tax relief will be a flat rate of 20 per cent (phased in from April 2017). Landlords who pay basic rate tax would see no change, but those on higher incomes will find themselves losing much more in mortgage interest payments. What may happen, is simply rents may increase to compensate, which is exactly what the Government didn’t want.
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” “ if your spouse pays a lower rate of tax, you could transfer ownership of one or more properties to them (taking care this does not lift them into a higher tax band). ensure that the ‘rental yield’ is high enough to fit with the new lenders calculators, as some have changed already.
check the management fees , before you commit to buying a flat/leasehold property. We think investing in property is still a very worthy option, and will be happy to talk through your requirements, and as one client said recently, “what else can you do with your money”!?
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Please remember Your home may be repossessed if you do not keep up repayments on your mortgage.
to contact Steve, email info@stevemears.com , telephone 0117 973 4300 or to find out more about Steve Mears Independent, visit www.stevemears.com
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