Buy to let property

[RosieLeaLovesTea]

Hi all
I have one but to let - I have had it 10years. I want to release some equity remortgaging so look to buy another buy to let in the spring. But I have just had my tax calculation. With all the tax changes on buy to let and property income the tax due has gone from approx £500 to £2000 a year. So I estimate to get another property with similar rental it will be approx £4000 a year in tax. It just seems not worth it. Any extra income is going straight out in tax.

Is it worth the hassle?

Depends, what has the capital appreciation been on the one you own?

What other savings do you have, as another BTL may mean you may be overweight in property so more susceptible to a crash in the property market.

Paying off a mortgage, while it might not leave you with net income, will be growing your equity so this is what you have to take into account. Essentially you are leveraging your investment, borrowing to invest. Depends on your risk profile and need, if any, for income from these investments.

I don’t need the rental income to live on. I have a decent salary and approx £40,000 in Savings that can be used if needed. I understand that in the long term the capital assert and appreciation is the overall gain. But based on current valuations the tax bill for 2 properties would be £4,000 per year. Which would take all over the income over the mortgage payment. There would not be anything left for void periods or expenses like a new boiler etc.

Plus you have the higher stamp duty charge, solicitor costs and capital gains tax when you want to sell.

Due to the new taxation unless you run a number of properties as a business than it 8s hardly worth the hassle of management, maintenance and administration as all of these expenses are taken after paying tax on the whole income.
I have now my BTL and invested in equity funds, each year you can use you ISA stocks and shares allowance to build-up tax free fund. Make money with your feet up!

@saleorbouy thanks for your reply. I have no idea about investing in equity funds or stocks/shares. Where did you start?

Hi Rosie.
See this link that might explain a little more for you.
Basically you invest in funds, unit trusts by buying units (shares) in the funds. These funds invest across a number of companies to maximize potential gains and minimise the risk that you might expose yourself to if you invedted in just one company.
There are a variety of funds that target specifc industries, countries or markets.
Essentially if you donthis within your 20k pa. ISA allowance it is an investment free from tax and CGT capital gains tax so you can maximize your earnings.
Unfortunately BTL is not very tax efficient and returns now are not really yielding much profit if you only have a few properties.
There are plenty of investment companies like Hargreaves lansdown so do more research I onlybput this link up as it has some easy to follow presentations, I do not invest with them.
www.hl.co.uk/investment-services/isa