Rent-a-room and tax deductions

[doobrey]

As per post #3 a yield anywhere near 14% for a hands-off ready-to-go investment is not consistent with anything I see on the market. Generally, yields like that involve buying a wreck and refurbishing, change of use / conversions, or perhaps low-rent HMOs with all the work / cost / risk that entail...

[doobrey]

Compared with what has gone before, I would say now is not a good time to buy.



Government policy. Primarily additional rate SDLT, limited relief on mortgage interest, and proposals to remove no-fault eviction (which has already happened in Scotland).

That said,...

[doobrey]

Something else I have learnt from this process is the requirement for completing VAT5L.

https://assets.publishing.service.go...d_property.pdf

[doobrey]

By opting to tax, the buyer becomes responsible for charging VAT. Therefore it follows that they have to register. If any doubt exists on this point it is stated in e.g. VAT Notice 700/9 para 2.2.4:

Where the seller of the business or part of the business is registered for VAT, the buyer...

[doobrey]

From my understanding, yes what you say is correct. It does mean you have to find an additional 20% up front, plus SDLT is due on the VAT-inclusive amount so it increases that as well.

[doobrey]

I gave notice to a problem tenant earlier this year because the others were consistently reporting that he was messy, inconsiderate, etc. It has been expensive due to the void that followed but I think it was the right thing to do out of fairness to the remaining (good) tenants. In this case it was...

[doobrey]

I recently made enquiries about mortgaging my own home (unencumbered) with a view to raising funds for a cash purchase. The response I was getting from brokers was 'no'. Due to AML legislation they said I could not release equity without something specific to put it straight into.

I asked...

[doobrey]

I asked this on a tax forum. From response there, plus general research, I would answer my own questions as follows:

(1) The purchaser can register for VAT as an individual, with no need to be a Ltd company.
(2) The purchaser must register for VAT (or 'become liable to register for...

[doobrey]

That was my understanding as well. Big difference between day trading and buy-and-hold.

[doobrey]

Thanks. That is what I thought....

[doobrey]

I am not suggesting that Rent-a-Room is a business (...and that is, I guess, part of the point of my question).

I am aware that claiming rent-a-room relief precludes the deduction of expenses for that property such as utilities, GSC, etc. However, my understanding/assumption is that this...

[doobrey]

Trying to settle a debate :-

I am aware that claiming rent-a-room relief precludes the deduction of expenses for that property such as utilities, GSC, etc.

However, my accountant has stated that I cannot deduct an amount for use of my own property for business purposes, since...

[doobrey]

As above, borrowing at 6% would not seem to make sense. Borrowing at a very low rate would make more sense... but is of course risky.

However, is it even possible? I recently made lots of enquiries in an effort to release equity from my own home, which is unencumbered. I never intended...