| |
| |
|
Nationalrealtyresource.com
|
| Home | Find a topic | Links | Guest Book |
| Welcome |
|
|
|
Buy to Let Property Investment
In recent years buy to let has been a popular way of investing in residential property. Stock markets are out of favour with many investors who have seen the values of their portfolios, endowment policies and pension funds shrink, whereas property has generally continued to rise in value. Interest rates are at historically low levels and mortgage finance is readily available on competitive terms from major banks and building societies. This brings property investment within the means of more investors than ever before. In these notes we will take the example of a foreign domiciled person, a non-resident of the United Kingdom, buying a property in London with the benefit of loan finance, but the general principles can apply to many other markets. Buying to let pre-supposes that there is a tenant willing to rent the premises and provide the cash flow, which will service the borrowing and is only one of the factors, which need to be taken into account before entering into a commitment. These can be summarised under three main headings. The Property It has been said that the three most important matters to take into account when buying property are location, location and location and this maxim holds just as true for investment property, ? It should be situate in an area where tenants are looking to rent ? It should be attractive to tenants and be, for example, an apartment, penthouse or a period or modern house. Listed buildings or converted churches may have their appeal but it is to a narrower market ? It should be in, or brought into, good condition. ? It should be in an area where property is in demand, making a resale easier in the future. The Finance For the right property mortgages are available both onshore and offshore, at competitive rates, from many of the major lending institutions and the terms can be negotiated. It is possible to obtain a loan on a repayment or interest only basis and for an agreed period. Whilst higher percentages are sometimes available we suggest not borrowing more than say 70% of valuation to avoid a cash flow crisis if interest rates rise and to allow for periods when the property is vacant. The lender will also be looking for a monthly rent of the order of 130% of the monthly repayment. Taxation In the United Kingdom the investor will need to take into account the three main direct taxes, ? Income tax, which is payable on rents. Loan interest and the costs of repairs and maintenance are deductible ? Capital gains tax, which is not payable by a non- resident on the sale of a property held only as an investment and not as part of a trade or business. ? Inheritance tax, which is charged at 40% on the amount by which the aggregate value of chargeable assets exceeds a threshold, currently £263,000. Exposure to taxation can be limited if, instead of the property being registered in the name of the investor, the title is held in the name of a company formed in a tax free area, the British Virgin Islands for example. This subject is covered below. There is of course one other important factor in this equation, The Tenant It is important to take up references on a tenant both to ensure that he can pay the rent and that the occupants are likely to keep the premises in good condition. Amongst preferred tenants are professionals such as bankers, stockbrokers, financiers, solicitors etc. many of whom require a property only when they are in the city and who have no interest in purchasing. Furnished or Unfurnished This is a decision to be taken in the light of the objectives of the investor. If he is looking for a long- term tenant, unfurnished may be the answer. The typical tenant described above may prefer a furnished property however. Structuring the investment As mentioned above, in order to reduce exposure to taxation, the property should be registered in the name of an offshore company, the shares in which are owned by the investor. By this means our foreign domiciled, non-U.K. resident investor can, ? Eliminate completely any liability to inheritance tax ? If each property is held within a separate company, avoid the risk that on a future sale the proceeds will be treated and taxed as trading income. It is very important that the company itself be managed and controlled from a non-taxing jurisdiction and this is where the Chesterfield Group can help. Our services include, ? Forming the company in a suitable location ? Acting as Directors and Secretary ? Maintaining the Registers and filing the returns required by law ? Keeping the accounting records and preparing annual financial statements ? Filing the tax returns ? Liasing with solicitors, property managers etc. as required The Chesterfield Group provides a full range of trustee, and corporate advisory, formation and management services and invites enquiries. More particulars can be found on our web-site http://www.chesterfield-management.com Ref=CH1EZ
MORE RESOURCES:
Real-Estate - Google News |
|
|
|
RELATED ARTICLES
Home Sellers Warning for Young Families If you're thinking about selling your home and moving up, do your homework before offering your home for sale. Read the following story to see what can happen to home sellers who don't do their math. Real Estate Investing and Home Ownership If you already own your home, you will probably make money in real estate without ever buying another property.The home you are currently buying with a mortgage is probably one of the most valuable appreciating assets you will ever own. California Home Seller Disclosure Duties Property Condition - Seller's What to Expect During the Inspection Process The Transfer Disclosure Statement (T.D. Selling Houses: Design Psychology Works! I've taught the concepts of Design Psychology for many years, and I know how much it can empower a person, and allow them to create a fabulous home that sustains their emotions. Since it's based on science, I know that Design Psychology is effective at turning plain spaces into happy places. How to Sell Your House For Full Price Many people believe that a real estate broker is needed to sell their house. So they post it with a broker who may or may not sell it and if they do charge exorbitant fees. Why Canadian Real Estate is Such Good Value Real estate agents, Canadian citizens and foreign investors interested in the Canadian property market are all in agreement - as Canada becomes a more desirable place to live year on year so property investment in Canada becomes a more attractive prospect year on year.Furthermore, because property in Canada is high quality, plentiful, incredibly affordable and easy to purchase, real estate in Canada is good value across the board. Property for Sale in Bulgaria - Emerging Property Markets 1 The latest investment property headline is this: Popular and well trodden markets such as France and Spain are out, Bansko is in.Where?Bansko, Bulgaria. Eleven Questions to Ask in an Agent Interview Questions Sellers Should Ask in Agent Interviews:1. Is your license in good standing?You can check an agent's certification yourself with your state's department of real estate. Should You Buy Hud Homes? Buy HUD homes are sometimes the cheapest option available for a common man to own a house. The fact that teachers and police officers could buy HUD homes at 50% off the market value attracts more potential buyers. Seven Tips in Choosing Maui Income Properties Aloha! If you are interested in choosing a Maui income property, then there are some details that you should know. You might be a bit intimidated by the whole process of buying a home. What Makes Fractional Shares Different from Owning Other Kinds of Vacation Properties? Fractional shares ("fractionals") are sometimes confused with other vacation property options, such as time shares and condo hotels. While there are similarities, there are a number of things that make fractional shares unique, and thus suited for a certain type of vacation property buyer. How To Spot A Good Buy Beauty is in the eye of the beholder, particularly when it comes to buying a home. Features that attract one home-buyer may repel another. What to Look for in a Home Searching for just the right home can be very exciting. You may plan ahead for the number of bedrooms and bathrooms that you want. The Sadness of Old Buildings From the book No Smooshing!For years, I've carried on a not-so-friendly debate with some of my artist friends from the West Coast about their ideas of what constitutes a good subject. We seem to be able to agree on certain things, like apples and oranges-and even certain landscapes. Fixing Houses: Using Psychology for Profits Real estate investors who specialize in fixing houses for profit gain new insights from Interior Design Psychology ideas. Increase your profit potential in the new buyer's market with these new transformation strategies. Where is Florida Investment Property Florida Investment Property - Why Investing is a Wise Decision There are many reasons to purchase investment property in Florida, the foremost being value appreciation. Property values generally rise while debt decreases; making real estate purchases a good investment. Russ Whitney and Real Estate Investing Gurus There is curently a huge real Estate boom in America today. Little does the world know that this boom has some to do with all of the real estate guru's out there. Practical Advice for Finding Irish Castles for Sale Have you ever wondered what it would be like to live in a castle?Have you ever dreamed of dancing in a grand ballroom that at one time was filled with princes and other nobility?If you find yourself dreaming of this lifestyle, you're not alone. Celtic castles, and all things medieval for that matter, have gotten very popular in recent years. Do You Want To Sell Your Rehabs Fast? That's an obvious question - we all do! So what is the trick? So much time and money is spent on systems updates, roofs, and structural issues, that many times there's nothing left for what really makes the sale: what your potential buyers see. And more importantly, what they fall in love with. Do I Have To Buy Real Estate Through An Agent? Sometimes when we are very busy professionals and very rich it might be convenient to let an agent do the groundwork for us. Letting them make appointments, drive to the property, roam through house after house sizing them up until they find a few great homes that might be just perfect for us.
|
| |
| |
|
Home | Guest Book |Site Map | Recommended Resources | Search Powered By: TJTMEDIA |
| © 2006 |
