Prospective Investors

Becoming a Landlord

There are two ways in which you may make money from purchasing or owning an investment property:

• Through increase in asset value:  which will be realised as a capital gain when you sell it.  This is subject to capital gains tax.
• investment income:  This is earning income through renting the property out.  This is subject to income tax.

If you are thinking of becoming a landlord, make sure you consider these main areas:

• Profitability
• Cashflow implications
• Tax implications
• Implications of a sale

Profitability

Have you correctly calculated your likely rental profit (or loss)?  are you aware of the differing treatment for pre and post letting expenses?  What expenses can be written off immediately, or over 8 years?

Cashflow Implications

Many profitable property investments have had to be sold because the repayment schedule is too onerous for the investor. Make sure you know the cashflow implications as well as the profitability of any proposed investment.

Tax Implications

Tax bills are an important component of a cashflow analysis.  In particular at the start of an investment if you have to pay preliminary tax.

Implications of sale

If you sell a property you will be subject to Capital Gains Tax.  Consider the CGT implications, in particular if the property you are proposing renting was previously your Principal Private Residence (Home).

Contact us

Contact us for a quote if you require support in any of the above areas.