Property Flashcards
Initial yield formula?
Annual rental income/
Price of the property × 100
Why is intial yield inaccurate and what’s a better way?
does not allow for the rental growth a lease provides through rent reviews.
Investment Property Databank (IPD)
3 reasons why property is iliquid
Expense, time, cant segment eg cgt
3 disadvantages of property
Liquidity, management issues, void periods
Rental yield formula
Gross rent − expenses
Market price + costs of buying
When does sdlt have to be paid?
14 days
When do FTB get relief and not?
Up to £425,000 0
Over £625k No relief
Whats is second home sdlt surcharge?
3% over £40k
Whats the SDLT on resi property for cos/oeics
15% if more than £500k (unless property rental business)
What is the sdlt supplement for non uk res?
£2% over £40k
What are the 6 qualifying rules for rent a room
- Max £7,500k beofre deductions.
- Occupy the property as their main residence at the same time as
the tenant. - One per residence.
- Split if two
- Exceeds £7,500, taxpayers have a choice. They can either:
– choose to pay tax on the excess over £7,500 with no deduction for expenses; or
– be taxed on the gross rent received, less expenses, with no rent-a-room relief. - Goods and services count.
What is the property income allowance
property income is exempt from
tax and does not have to be declared on a tax return if it is less than £1,000 (before
deducting expenses
PIA - what if its over £1,000?
there is the choice of deducting the
allowance from gross income to calculate taxable profit, instead of deducting actual
allowable expenses.
What are 2 advantages of commercial property over resi
Maintenance responsibility on tenant
Longer leases
5 disadvantages of commercial property
- Slow and expensive
- Growth goes in 3-5 year steps through rent reviews
- only be sold as a whole..
- Small market so hard to analyse
- There can be a time lag in increasing supply which leads to over supply
