The New UK Landlord Property Taxes
How They Can Affect You, and What You Can Do
As a property owner, you must be wondering how a lot of the new changes in the government levies and taxes can affect the value of your real estate or your desire to own one. You perhaps are wondering as to what to know about the new landlord taxes in the UK. Well, here they are.
Increase In Stamp Duty Rates For Second Homes
Stamp Duty Rates for second home owners in the United Kingdom has increased. Therefore, if you want to buy a second home, you will be expected to pay a higher rate of Stamp Duties than someone who is purchasing their main home. The payment is made on a tiered basis that relies on the value of the property you wish to purchase.
You should note that it applies to the purchase of your second home, and it does not matter if your main home is located overseas. But if you happen to sell your first home and then purchase another, the second home will not be rated as such for tax purposes.
The Buy-To-Let Tax
If you are aware of current trends making the news, you will notice that there has been another increase in the buy-to-let tax landlords have to pay. And this is a huge problem for landlords because they can no longer offset mortgage interests in their homes against rental income accruing to them from tenants before they can calculate their tax.
This means even if you do not see a corresponding increase in your rental income, you can still pay higher tax rates. However, you can fight this by moving your property into a company ownership, or sell it, or convert the buy-to-let property into a private residential.
New Landlord Rates Will Likely Rise
You should know analysts have postulated that in the UK, landlord rates for their rental buildings will incrementally increase faster than the price of housing units in the incoming five years.
This sudden prediction is because of the increase in the Stamp Duties, alongside tougher mortgage rules that are taking the ownership of buy-to-rent building units out of the hands of low-budget individual buy-to-rent home owners. And this is because of the increase in the property taxes.
What To Consider Before Buying A Home
You may already have your first home and just want to purchase an additional house to use as a buy-to-let income maker. Before making the decision to do this, you might want to consider if the new stringent mortgage rules and imposed taxes will favour you.
After all, for the purchase of your first home, you will be exempt from the Stamp Duty Taxes for second homes. Additionally, if you are purchasing a new home because you want to sell your old home (though you are yet to sell the old home), then you will be expected to pay the new Rates but will eligible for a refund within thirty-six months if you dispose of your first home.
Can I Beat The New Tax Hikes?
You are wondering if you can ever invest or possibly recoup your investment funds (that is if you have purchased already), taking the new tax hikes into consideration. You can steer your finances clear from rising annual costs and a whole lot of other shortfalls associated with the new tax and mortgage regime.
For one, you can remortgage your property. This can protect you against rising borrowing costs. Or you can become a company because of the government cuts to corporation tax and the fact that you can offset costs against rental income (as a company).
I hope all these helps with your real estate decisions in the near future.