In the UK the government doesn’t seem to like those of us who invest in buy to let property. Over the last year the stamp duty has gone up on them and a couple of tax breaks have taken a hit. See here for our article on the changes.
So you may be thinking about transferring the investment into something else. Here are a few tips to help you decide what to do
- List your portfolio on a spreadsheet with the values and returns.
- Set the spreadsheet to calculate the percentage return.
- Make sure you assess against the value, not what you paid for it; if you reinvest its what you could sell the asset for versus what it earns you.
- Note what the properties cost so that you can consider the potential capital gains tax if you sell.
- Record the mortgage outstanding so you can see what the equity is in each property.
- Understand the future increase in value that you expect and add this to the revenue return percentage.
- Don’t forget any special CGT reliefs that might mitigate the tax, and whether these diminish the longer you have the investment.
- Estimate the income tax payable on the income
This should help focus the mind on which property needs serious consideration.