Avoid Property Trading Tax by Belvoir Andover

 

Avoid Property Trading Tax top

Some people regularly purchase run-down houses, do them up and sell them on. If you do this as part of your building/property development business, the profits made on the sale of the properties may be taxed as trading income (tax rates: 20%, 40% or 50%). If you let the renovated properties, then sell them at a later date, the profits made on those sales will be taxed as capital gains (tax rates: 18% or 28%). The position is less clear cut if you live in each property for a period either during or after the renovations are undertaken. The Taxman is keen to charge any profits made on the renovated property as trading income, because if the profits are categorised as a capital gain, that gain may well be exempt from tax on the basis that the property was your main residence. For the Taxman to prove the money made from the property is trading income he must show the owner's motive for purchasing and renovating the property was to make a profit, and not simply to make the property more comfortable for the owner to reside in. This is difficult to prove. If the owner is a builder by trade the Taxman may also argue that the property renovation was undertaken as part of his building business, even if he also lived in the property. The Taxman may say the profits should be taxed as a trade if the owner has a history of purchasing and renovating many properties and living in each for only a short period.     If you would like to save more tax and get advice from property related specialists, please contact Greg Greatbatch at greg.greatbatch@belvoirlettings.com or telephone 01264 351222 (opt 2).   Belvoir Andover has been operating as a lettings specialist in Andover since 1997. Belvoir Lettings is a national network of franchise offices dedicated to offering the highest possible levels of customer service to both landlords and tenants. Visit www.belvoirandover.com for more information about us.

AN EXPERT ‘BUY-TO-LET’ CHECKLIST FROM BELVOIR

Buying-To-Let - popularly hailed as an alternative to badly performing pension funds – was slowed down by a recession that squeezed mortgage deals and discouraged housing investment.

 

But a reviving market is now generating more attractive mortgages, stimulating property prices and generally raising rent levels again, says Phil Pinkney, director of one of the UK’s leading residential lettings specialists, Belvoir, which has an office in Andover.

"Advice for new Buy-To-Let investors can still be contradictory and confusing," he says. "Like most things if you’re Buying-To-Let, you need to do it right and when a considerable amount of your own money is involved it becomes absolutely critical."

That’s why Belvoir has prepared a definitive checklist for anyone wanting to make a success of an investment in residential rental property. 

It offers a selection of do’s and don’ts, "But", says Phil

"it’s only guidance – we prefer to sit down, face-to-face, with a new potential investor and offer more solid professional advice, since everyone’s circumstances and expectations are very different. "

 

BELVOIR’S ‘BUY-TO - LET’ CHECKLIST 

 

1. Research your market – the area, the people you want to rent to, the available property, the benefits and the risks – and keep up with letting industry news.
2. Choose your preferred tenant type. Students? Young professionals? Families?
3. Find the right property that will appeal to them – houses, flats, older properties, newer builds? Students may not need anything particularly stylish but a young professional might.



Phil Pinkney - Belvoir Director

4. Then pick the right area where they want to live – parents may want to be close to schools and shops; wage earners need to commute to work; students have to be near to their college or university. Look outside your own area if necessary.
5. If local crime statistics are available, take a look and bear them in mind.
6. Study the condition of any property you are interested in – from roof, guttering and windows on the outside to condensation, leaks and electrical wiring on the inside. Be conscious of fire risks.
7. Check whether extensions or conversions have met planning permission or building regulations.
8. Don’t accept the first mortgage offer you get. Shop around. Gather information. Compare.
9. Get the maths right – your investment might give a better return in some other way. How much is the right property going to cost? Is the rent you expect to get enough to cover the mortgage and give a profitable return? Does the potential capital growth add up to a good investment?
10. Talk to an independent lettings agent before you buy. Most mistakes involve either wrong location or wrong price paid for a property.
11. Don't be greedy – Buying-To-Let should be approached as a long-term investment, not a quick fix.
12. Be prepared for costs that can upset your calculations – ongoing maintenance, small and major repairs, advertising, future rate rises, mortgage costs, agents fees, tax, falling house values, periods when you can’t find tenants and the property is empty.
13. Get the right insurance cover – and that can include insuring yourself against tenants who fail to pay rent.
14. If you’re going to manage the let yourself, be prepared to sacrifice your evenings and weekends!
15. If this is likely to be more of a drain than you are prepared for, seek out a professional, fully accredited lettings agent who, for a fee, will look after your property, your interests and your tenants on your behalf.
16. As well as being completely up to date on legal, legislative and property industry issues, a local agent such as Belvoir will have expert knowledge of the best rates from local electricians, plumbers and so on, which in itself, can be worth a weight in gold. Belvoir local offices do not make any charge for pre-purchase advice, property visits or rental valuations.

"Above all, before you do anything, get professional advice ," says Phil.

"As the legendary, oil well fire-fighter, ‘Red’ Adair, once said: "If you think it’s expensive to hire a professional to do the job, wait till you hire an amateur."!

 

For more information or to book an appointment with Phil or Natasha, please contact Belvoir Lettings on 01264 366611 or view more information on our website: http://www.belvoirandover.com/landlords.html

 

Three Words That Can Save The Day

Three words can make or break deposit disputes between landlords and tenants … inventory, inventory, inventory.

“Just as ‘location’ is a key word in buying a property, ‘inventory’ is a key word in renting it,” says Greg Greatbatch, Director of the country’s leading residential lettings specialist in Andover, Belvoir, which has an office on Winchester Street.

Disagreements over the condition of property, at the end of a tenancy, is a major reason for disputes arising over how much of the tenant’s deposit should be returned, because landlords often deduct the cost of cleaning, replacing or repairing household items, furniture and furnishings that tenants say were like that when they moved in.

“A good quality inventory with clear photographs - agreed, signed and dated by both landlord and tenant – can overcome all argument about the condition of a property and its contents,” says Greg who runs the Belvoir office on Winchester Street in Andover “What would otherwise be a matter of opinion becomes a matter of fact.”

“When you consider that, according to current Land Registry data, the average property price in Britain is now £225,000, it makes a lot of sense for landlords to protect their assets with a quality inventory. Professional lettings agents such as Belvoir are very experienced in carrying out a thorough and detailed inventory report – providing a solid assurance to landlords that their interests are well protected.”

There are other basic ways of making sure that relationships run smoothly.

When a tenancy starts, the landlord and tenant should each keep jointly signed tenancy agreements that set out terms, conditions, obligations and responsibilities on both sides. If a property in not fully managed and the landlord does not have an agent, they should both be present to go through the property, discuss any concerns and agree the inventory.

Tenants should also meet up with landlords or their agents for any periodic inspections during the tenancy – at least two or three times a year to ensure there are not any serious problems with the property.

Landlords should keep relevant invoices, bills, work records and household receipts as evidence of expenditure, whilst tenants should keep copies of household bills, since they should not be arranging for any works or alterations to a rented property without first consulting the landlord or agent.

And when the tenancy is over both parties should be present at the ‘check-out’ to discuss any problems and reach agreement over any deductions from the deposit.

“Accidents happen but so does normal wear and tear,” adds Greg “If both landlords and tenants stay realistic then many quarrels can be settled before there’s any need for the dispute resolution process.

“In fact there is another key factor in all this – it’s called ‘communication’. Done properly, it can save an awful lot of trouble.”

BELVOIR Andover is joined by Natasha Conti

Natasha Conti - The new Manager of our Andover office !!

Many of you will know that David Rouse, our former manager has now semi-retired, taking a back seat at Belvoir but is still negotiating behind the scenes.

This has meant that we needed to find someone fresh, dynamic and able to improve overall customer relationships, satisfaction and ultimately bring in more clients to our business.

Natasha joins us from one of Southampton's leading letting agents, having managed a portfolio with over 600 properties she has an in depth knowledge of the whole lettings process and property law. Having worked in Salisbury, Southampton and Andover she has a desirable valid understanding of the rental and investment market particularly in Hampshire and Wiltshire. Her proven success has been down to her inventive and motivated techniques to reduce property void periods and positive property productivity. Natasha has been in the property industry for a number of years now and has a real passion for the industry looking to build her own portfolio. She has key knowledge of the local and national market and has given various speeches at property investor meetings, introducing new investors and landlords to successful rental strategies. She is motivated to LET your property.

Natasha says 'Andover is such a great town for investment landlords, I am looking forward to meeting and building relationships with Belvoir's clients. I am motivated to go that extra mile for current and new landlords to really set Belvoir above the rest, introducing new landlords to the benefits of Andover's leading letting agent'

Visit our website for more information about how Natasha and all the team at Belvoir Lettings can help you http://www.belvoirandover.com/