Incorporating a Property Rental Business

 CGT, Property Tax  Comments Off on Incorporating a Property Rental Business
Nov 122016
 

The following article was written in July 2013. Since that time, the Government has introduced various changes to the tax legislation, in order to discourage private landlords operating in the buy to let sector. These changes include higher SDLT rates on acquiring a “second home” restrictions on tax relief for borrowings and higher CGT rates on residential property.

This has led to increasing interest amongst individual landlords in the question whether it is worth incorporating. Although companies are also subject to the higher SDLT rates, they are not affected by the interest relief restrictions, and they are taxed at lower rates, both on rental profits and capital gains.

There is a special CGT relief for incorporating a business. In the context of buy to let incorporations, it is crucial that the properties are held as business assets rather than as an investment – and the two are not necessarily the same thing.

(This article can be downloaded in pdf format at Academia.edu.)

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Property Tax: Why can’t corporate landlords deduct their finance costs in calculating their profits?

 Corporate Tax, Property Tax  Comments Off on Property Tax: Why can’t corporate landlords deduct their finance costs in calculating their profits?
Apr 152016
 

Did you know that a corporate landlord can’t deduct its borrowing costs when calculating the profits of its rental business? Don’t believe me? Well, it’s true. And in this article we are going to find out exactly why.

I must confess that I myself had always assumed that interest payments on loans taken out to fund the business were tax deductible. But I got a huge shock one day when I was doing a piece of research and my eyes strayed into another part of the legislation. But once I got over my shock, I realised what was really going on.

(This article can be downloaded in pdf format at Academia.edu)

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Summer Budget 2015 – Tax relief restricted for residential landlords (and other news)

 Investment Tax, Property Tax  Comments Off on Summer Budget 2015 – Tax relief restricted for residential landlords (and other news)
Jul 092015
 

The second Budget of 2015 has not been particularly kind to those people who buy homes to rent them out to those who need a place to stay.

Starting from 2017, individual landlords of residential property will only be able to claim tax relief on their finance costs at the basic rate. We shall look at these rules in further detail, as well as some of the other measures that will affect property landlords following the latest Budget. Continue reading »

Starting a Property Business

 Property Tax  Comments Off on Starting a Property Business
May 092013
 

Let us suppose that you’ve been fortunate enough to have been left a substantial sum of money in your great aunt’s will. You have decided not to splash out on a party to celebrate, or to spend the lot on a round the world trip. Instead, you have decided to be sensible and invest your inheritance so that you’ll have a secure nest egg for your old age.

But where to invest? The banks offer pitiful interest these days, and you don’t really fancy the stock market. What about property? The headlease on the local fish and chip shop is for sale, and there are some student flats on offer – you’ve read somewhere that these particular types of investment ought to provide you a reasonably safe home for your money.

After considerable thought, you take the plunge and become a property tycoon… Continue reading »