Week 6 Flashcards
(28 cards)
Describe property owning middle class?
They just want stable long term investments init?
Residential vs commercial?
Dunno chat gpt thought you needed to know its lived in and business use.
What is gearing?
Borrowing money to buy a property like a mortgage.
What are the two basic returns in property?
Short term- rental income
Long term- capital growth (property increases in value)
What are 6 advantages to property ownership?
Security in that they’re physical and tangible
Capital growth as property tends to increase in value
Buy to let/ income generation
Collateral against loans
Great for retirement
Provides a fall back if you sell
What are 6 disadvantages to property ownership?
Cost to maintain
Not liquid (uncertain)
Not assurances on tennants
tenants could damage property
natural disasters
cost and times involved
When renting out residential property, how does that work in terms of when you get rent and tax in basic?
Rent collected is seen as income tax and therefore is taxed as income tax. You can before taxing use some money for maintenance and insurance.
On sale of a property that is not primary residence you do not pay CGT, true or false?
False, you do pay CGT on non primary property.
When you sell a house for more than purchased for and make a profit, thats capital growth, true or false?
its true.
In residential property, what is stamp duty in basic?
A small fee percentage when you buy a home over a certain price point
How might a residential property who has one primary home get a tax relief and how much would it be?
By renting out a room in your primary home you could get a 7.5k tax relief.
What are three advantages and disadvantages of buy to let?
Advantages:
-provides income
-you can achieve capital growth along side making income
-you have tangible asset
Disadvantages:
-Maintenance
-Tennant may fail payment
-No Tennant at all
Is location an important consideration in residential property and briefly in basic why?
You can blow this up using exam techniques, but neds, highways, more busy etc can lower prices, crime rates, schools, etc..
Describe the two types of tenure?
Freehold- You hold the property and land forever like me mum and dad
leasehold- you hold the property, not the land
What are the three kinds of commercial property?
Office, industrial and retail
In commercial property, how is rental income different to residential income, how’s it treated different?
HAHA, this was an OG tricky-wicky, its treated like normal income.
How does CGT work on commercial property in very basic and is tax paid first?
CGT is paid when for ex a property is sold IF YOU MAKE A PROFIT, CGT is paid before tax.
How does stamp duty compare in commercial, whats it like?
Stamp duty is paid on commercial purchase, its lower than residential but can cost a lot in legal fees, valuation fees and possible VAT.
Commercial maintenance, talk to me?
Chill question, easy to answer tbh, you just potato waffle this one.
What are 3 indirect property investments?
Main vehicles
Offshore property investments (good on tax)
property shares (buying shares in company with land)
What are the two property returns?
Capital growth and rental
What is rental yield and its formula?
Rental yield is what you are making compared to value of property.
Formaula is
Rental amount/ property value x 100
What is gross rent?
The total rent you would earn if tenants would pay 100% of the time
What is void rent?
When their are no tenants, your income will not be as high as no money incoming
