A lot of investors are currently taking the decision to set a limited company for their buy to let properties. But, this won’t make sense for everyone. Whilst it is true that corporation tax can be lower than personal tax there are many other charges and complexities involved in this approach.
A seller might get less for their property and a buyer forfeits their right to change their mind. But property auctions offer speed, certainty and security that is impossible to achieve when you buy or sell through an estate agent.
To find a buy to let mortgage you need to consult with an experienced broker. Recent changes have made it very complicated and there is more change to come. There is a good chance that as of October 2017, anyone with more than 4 houses will start to find it very difficult to get mortgages to increase their portfolios.
Whilst true that the returns from investing in property are lower today than they have been in the past, investors are still keen on bricks and mortar. A big draw is that with property is more tangible than stocks and shares – you can see and touch it. But before diving in you need to manage your expectations and know exactly what your overheads are going to be.
There is some great investment property out there waiting to be found and the good news is the only tool you need to find it is Zoopla. Today we look at four underutilised filters that investors can use to find below market value property and motivated sellers in their chosen area.
When it comes to property auctions, one thing you must pay close attention to is the legal pack. If you don’t know what you are signing up for then you might be in for a nasty surprise which could come in the form of additional costs, a shorter completion period or a whole host of other things. But be warned, the legal pack is written in legal language so it is always best to consult a solicitor.
With the introduction of Section 24, property investors are exploring ways to limit their tax liability. One way to do this is to form a limited company for buy to let. This solution won’t make financial sense for everybody but, if it is the route you decide to go down, then you will need your new company to be a special purpose vehicle or SPV.
Capital gains tax is a tax that is payable on profit made from the sale of an asset. But, this tax works differently when it comes to selling property than it does with assets such as stocks and shares. Capital gains on property have to be declared earlier and they can be taxed at a much higher level as well.
In a property auction, there is a guide price and a reserve price. A guide price is what a buyer will see in the auction catalogue and is a guide to the value of the sale. The reserve price, on the other hand, is set by the seller and represents the minimum that they are willing to sell for. For the seller’s security, the reserve price is not made public.
HMOs are different to standard buy to let properties in that regulations regarding fire safety can be more complicated and are often more expensive to implement. There are good reasons for this. For example, in an HMO there are going to be more internal locks than in a family home and the tenants might not even speak to each other that often. But don’t worry. Fire regulations tend to be nothing more than common sense and your local HMO enforcement officer is there to help.
Recently, there has been a lot of talk amongst property investors and landlords about incorporation and about whether or not incorporating a buy to let limited company is the best way to offset the financial implications of Section 24.