Early in my career, when I earned very little money but wanted to borrow loads of it, I learned something important. Living like a monk helps you save cash, but lenders don’t care how good you are at saving. All they care about is how much you’re taxed on.

Have you ever been turned down for a job due to ‘lack of experience’? It turns out that property investment has a similar vicious cycle; you need money to get money. When you take out a mortgage, you need to provide your taxable income. The more you declare to the tax man, the more you can borrow. It’s as simple as that.

In our industry, we invest leveraged funds against inflation-beating assets. So, to succeed in property investment, you need to be able to borrow as much money as possible. Minimising your tax bill is not the way to do that! Instead, it’s ideal to declare every pound of income you can. You can borrow 5x that amount to reinvest.

Avoid tax avoidance!

I’ve chosen to pay more tax in my career. For example, I don’t claim for smaller expenses, or use oft-reported tax avoidance schemes. I pay more, so I can borrow more, so I can invest more, so I can generate more income, so I can reinvest into more assets, and so on.

Buy-to-let lending is predominantly calculated against your property rental business, rather than you as an individual. However, it’s still a good idea for landlords to pay more tax! Yes, lenders look at how much rental income your business will generate. But they also look through that, to the worst-case scenario. The worst-case scenario is that you don’t earn the projected rental income, so you as the landlord have to pay the bills. How much you can borrow, comes back to how much you declare.

I’m not suggesting you pay more tax when you don’t need to. That wouldn’t be a property investment tip worth heeding. I’m just saying, don’t try to avoid tax when it’s lawfully due. Let the sour taste you get when your tax bill arrives, be sweetened by being able borrow more, to invest more, to generate more income, to reinvest… you get the picture.

Think strategically

Are you ready to start a bright future in property investment, on firm foundations and on your terms? Book a call. Whether you’re just starting to invest, or you already own property and want to streamline your approach for maximum success, we’re here for you.

Bonus property investment tip

In case one unpopular (but hopefully useful) opinion from me wasn’t enough, here’s another. 😉

@homesureproperty It might sound counter-intuitive but sometimes, if a tenant isn’t paying their rent, paying them to leave isn’t a bad idea! What do you think? #propertyinvestment #landlordproblems #landlordlife #landlords #ukproperty #propertyinvesting #propertyinvestor #propertymanagement ♬ original sound – Homesure Property

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