Rental Property Tax has been put under the microscope following the Budget of 2015.
The tax you pay on Rental Property Income, Capital Gains Taxes and Stamp Duty are forecast to increase significantly.
If you hold your property in your own name, which the large majority of the 2.3m Landlords do, you will now following the Tax changes, see increased tax bills. The amount of interest you can claim as an expense will reduce by the year 2020. This change will have serious consequences for many Landlords and force them to sell their properties, thus crystalising capital gains.
To avoid this change in property tax you have 2 Solutions.
1. Move your properties into a limited company
2. Collect no rent and pay your mortgages with loans
Limited Company Option
If your properties are transferred into a Limited Company, you will not be subject to the new legislation, unless the rules are changed to include Limited Companies.
There are a few problems you will face with an existing portfolio. You potentially will incur Capital Gains Tax CGT and Stamp Duty on the transfer. Not to mention legal costs and possibly a change to mortgages depending on your solicitor. There are ways protect your assets and to make this transfer without the need to incur the above taxes and remortgaging. Property Investor Reward Club has a specialist Asset Protection provider who can give you advice.
It would be fair to say that it is probably just a matter of time before HMRC level the playing field between sole traders and Limited companies.
So what other options do you have?
Should you be fortunate enough to have built up a portfolio for your future, the next problem is protecting it from an aggressive creditor that may materialise at the most inopportune moment. Asset protection MUST be done in advance of the creditor taking action against you and your assets. Sadly, many people wait until the potential creditor has taken action and it is usually too late to do anything. Don’t make that mistake. Under certain circumstances this may not be the case. Speak with the Property Investor Reward Club specialist Asset Protection provider.
Collect No Rent and Pay your Mortgage with an Advance
One example could be to collect the rent due in a management company. The managment company provides you with an advance in a fiduciary capacity. You therefore receive your money as an advance to pay the mortgages. This circumvents the latest legislation as your property is in Trust and means you do not pay tax on the rental profits if there were any.
As property values rise SDLT, Stamp Duty, is becoming a large cost which solicitors are making material errors calculating your liability. Property Investor Reward Club have partnered with the UK’s number 1 expert in this field who will successfully reclaim what has been over paid for you.
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