Complainer
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Nope - you're still not getting it. The investor will artificially ensure that the investment doesn't make good money - he will maximise his interest and take the state subsidy tax relief.If the investment is making good money then the investor will pay tax on that at their marginal rate
Nope - you're still not getting it. The investor will artificially ensure that the investment doesn't make good money - he will maximise his interest and take the state subsidy tax relief.
So where he is making a good profit, he avoids tax by making it look on paper like he is not making a profit, by diverting his capital elsewhere. He is better off keeping it on deposit then repaying his loan, thanks to the tax relief.
This is offensive. I've been beating this particular drum for many years now, before and after the bubble.This is the argument of the newly converted. Those who didn't see the property bubble for what it was, when it was, and now zealously want their pound of flesh for falling for all the bull.
The problem is that in many cases, particularly with interest-only mortgages, the mortgage interest is artificial and unnecessary. The investor may well have the funds from his profitable investment to repay the capital, but he chooses not to do so for tax reasons (as per Brendan's advice. It is that simple.From what I can see you either accept mortgage interest as a legitimate expense or you don't.
If it isn't then how so?
If it is, but you want to disallow it or a percentage of it, for tax purposes then why? Are there other examples of apparently legitimate expenses that
are disallowed for tax purposes that you are aware of?
I do want to be convinced on this but ultimately your tax system has to be fair and transparent.
What you've described is a person who's made an investment that doesn't make him any money on a day to day basis, who never pays for the property that forms the investment, who has paid up front a huge tax bill in stamp duty.
If it is, but you want to disallow it or a percentage of it, for tax purposes then why? Are there other examples of apparently legitimate expenses that
are disallowed for tax purposes that you are aware of?
It is not unusual for tax law to be specific about write-off/depreciation periods for particular assets. Why should it not be specific about interest periods allowed for this kind of asset?
That sort of idea definately works for me. Mortgage interest only being tax deductable once the principle is paid within, say, 20 years. You'd need some fairly watertight legislation. What happens if the owner sells within that period - a clawback similar to the S23 presumably? Only specific investor motgages allowed - no balloom payments.It is not unusual for tax law to be specific about write-off/depreciation periods for particular assets. Why should it not be specific about interest periods allowed for this kind of asset?
Nope - you're still not getting it. The investor will artificially ensure that the investment doesn't make good money - he will maximise his interest and take the state subsidy tax relief.
So where he is making a good profit, he avoids tax by making it look on paper like he is not making a profit, by diverting his capital elsewhere. He is better off keeping it on deposit then repaying his loan, thanks to the tax relief.
It is not unusual for tax law to be specific about write-off/depreciation periods for particular assets. Why should it not be specific about interest periods allowed for this kind of asset?
he avoids tax by making it look on paper like he is not making a profit, by diverting his capital elsewhere. He is better off keeping it on deposit then repaying his loan, thanks to the tax relief.
Many of you on this site may disagree with a great deal I say.
Given that you underlined the 'fact' in "it is a fact that CGT compliance rose when it came down to 20%", I thought that you had some hard evidence, such as a Revenue report or a C&AG report to back this up. Perhaps not. Silly me.
Sorry if this is not patently obvious, but the two things are connected. They don't pay their fair share of tax BECAUSE they abuse mortgage interest relief. And that is without even looking at the ongoing 'black economy' landlords, as evidenced by the fairly regular threads on AAM showing landlords still refusing to give the PPS number.
True, but that's not to say that tax evasion by landlords doesn't happen.
This is abused because (as recommended by Brendan B), landlords can and will keep their borrowings artificially high to maximise their tax relief.
THis scam was quite obvious to everyone, including the Govt that pulled this relief some time back, following the Bacon report. Pity they didn't have the guts to stand up to the lobbyists and hold their line - we mightened be in the mess we are in now in the property market.
Like I say to my 5-year-old when she grunts or groans at me, if you have a question, please talk to me and explain it to me. I don't respond to grunts.
Like I say to my 5-year-old when she grunts or groans at me, if you have a question, please talk to me and explain it to me. I don't respond to grunts.
I'll take it then that you're not interested in any serious discussion on this issue so.If you can't spot the irony in my post maybe you should ask your 5 year old.
I'll take it then that you're not interested in any serious discussion on this issue so.
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