We all pay income tax, but sometimes it seems that portions of your income can "slip your mind", either accidentally or on purpose. The tax man seems to classify these slip ups as tax evasion or tax avoidance, depending on the case. One of the most common slip ups that people are experiencing is neglecting to mention that they own a buy to let property. This means that you receive rent, which is income and therefore the taxman is "entitled" to a chunk of this. This has lead to a major crackdown on those people who are perceived as offenders, whether intentional or not.

This can then leave the owners in a perilous position since the rental is effectively reduced and this can mean that it becomes insufficient to cover the mortgage or loan. It can also become a major problem if it pushes you up into a higher income tax bracket. This could lead to an increased amount of tax that needs to be paid could then cause major financial problems for a person who was already having financial problems.

The actions of the tax man could lead an increased number of buy to let properties coming onto the market. This could in turn lead to a decrease in property prices as the supply increases and demand potentially decrease. The decrease in demand for properties could be due to the tax man's actions causing the buy to let option to look less attractive to potential investors. These two could work together to lower the cost of properties, but the cost of letting a property could increase due to the same factors.

One of the major problems is that for many people the taxation system with regards to property and particularly buy to let properties is very complex. This complexity can be inflated when you own more than one property or you are new to the market. This can decrease the attractiveness of buy to let properties as investments for many people. For many people their attractiveness lay in the fact that the money borrowed to finance the purchase could be completely repaid with the rental income. When this is no longer the case there is less chance that people will continue to invest in them in such large numbers.

The overall effect of the taxation on the reduction in demand for buy to let properties may take a while to be felt in the property market, but it is inevitable that it will be felt. This can then cause a see-saw effect with rent and property prices. While the rental prices are currently fairly low and property prices are high, the rental prices will then increase noticeably while the property prices will decrease noticeably. There are a number of people staying out of the property market at the moment in the hope that the price fall will allow them to afford to buy to let. This is likely to help increase the speed with which the fall occurs.