This month we are focusing on: Inheritance and Property Tax
If you own, or plan to own, one or more investment properties you may want to know whether these should be owned by you personally, or via a company.
If you own a rental property personally – you will taxed on the monthly rentals (less allowable expenses) and taxed on the highest rate of tax currently being paid by you.
The advantage is that if you are looking to purchase a property and sell it quickly – you have a personal tax allowance that can be deducted from the disposal profits (and if the property is owned jointly you can use both allowances).
NB Reliefs for finance charges, such as mortgage interest, is being eroded to zero
Where you buy a property through a company – the monthly rentals (less allowable expenses) are taxed on the Corporate Tax rate (not – the often higher – personal tax rate). And you can currently claim relief for finance charges, such as mortgage interest. However when coming to sell the property you don’t have the personal allowance to use.
So it’s about deciding whether you are thinking of this as a long term – or short term – project
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If you know anyone that needs help and advice with the most tax efficient way to treat investment properties please ask them to contact Avanti, (08000) 388 799