Buying a 2nd home+tax!

[toby2111]

Hi!
I bought a house 2 years ago and have been living in it since.Recently,myself and 2 friends have been talking about buying another house between us,renting out our respective houses and moving in to this "second house".The plan would be to do it up,live in it,then sell it in maybe 5 years time to try make a few bob!I know we have to pay stamp duty initially and capital gains when sold which is bad enough.However it seems that Mr.Taxman would also demand a "clawback" on my 1st house(3% of purchase price) plus 42% of any rental income also.Maybe I got my info wrong but this seems crazy!Anyone got any advice/shortcuts/loopholes??

 

[ClubMan]

If you buy a property as your PPR (Principal Private Residence) and then rent it out (other than under the owner occpuier rent a room scheme) within 5 years of purchase then you are liable for a clawback of stamp duty (i.e. difference between the investor SD on the property and what you originally paid if anything). This is not crazy - it's specifically to stop people buying ostensibly as owner occupiers and then immediately converting the property to a rental investment property. There are also other tax implications in renting a former PPR. This stuff is covered in many existing threads here on AAM. You should get independent, professional investment and tax advice before getting into property investment without full knowledge of the relevant info.

 

[asdfg]

While I would agree completely with Clubman, you really need crunch the numbers and do additional research and get professional investment and tax advice before doing anything.

plus 42% of any rental income

It is 42% of profit from rental income
There are a number of deductions that you can make, the main ones being interest on the mortgage, cost of furniture and fittings over 8 eight years
See [broken link removed] for a more detailed explanation

 

[toby2111]

Cheers folks!Thanks for the advice...it looks like it won't be as good a venture as I would have hoped!!