Property management and tax implications
Investment in properties is becoming very popular because of the attraction of steady long term capital growth and rental income, particularly with low interest rates.
With such an investment, it is important that all aspects are looked at very closely and it is managed in the most tax efficient manner.
How properties are bought:
Individually
Rental accounts should be maintained and reported each year under Self Assessment rules. Within these accounts we can work with you to ensure that you have utilised all expenses to ensure that you do not pay unnecessary tax.
Jointly owned properties
Considering the long term nature of these investments we would always seek to evaluate if transferring properties into joint names is worth considering. This will help you to use an extra Capital Gains annual allowance when you sell the asset.
Transferring properties between husband and wife are exempt from Capital Gains Tax.
Owned through the company
A number of factors should be carefully considered before choosing the company route.
The net rental income will be taxed at the company’s marginal rate of tax, which is generally lower than for an individual but again if the purchase is being financed with a high percentage of loan/bank finance, the corporation tax could be relatively small.
Do you have another UK Limited company?
Group company structures could be very useful; we would not often recommend shifting properties into a current trading company as that will make a trading company lose its trading status which might have some adverse implications.
Future Property plan
Do you wish to keep the property for a long term?
If so we can help you with many of the issues you need to consider:-
- Use of company as a tax shelter
- Tax efficient long-term plans
- Using the company as a retirement fund
- Selling the shares and IHT
- Stamp duty land tax (SDLT)
- Residential properties
- Commercial properties
Group structure and planning
Parallel structure
This is where you own shares directly in the property company and keep your shares separate from your other company.
Holding Company structure
Here you will have a dormant holding company as the parent company; this company will have all the shares in your property company.
We can advise on the best structure for you.
Owning properties for investment can be very financially rewarding and there are many tax situations to consider. Please get in touch and we can help you maximise your return!!
We are so confident we can make tax savings for you and your business, we are pleased to offer a 'no strings' review of your current arrangements without charge 
