PROPERTY
There are now an increasing number of individuals wanting to invest in property, either to supplement their income or to build a property portfolio for future benefit.
We can support you at all stages along your journey.
LANDLORDS
Being a landlord starts with the purchase of your first property or perhaps a property that you inherit. It’s essential that you understand the tax implications along with all the regulations on renting a property, finding the right tenant and making sure you get a good return on your investment.
CAPITAL GAINS TAX (CGT)
When a property is sold, you may have a Capital Gains Tax liability on any increase in its value. There are various costs you can deduct and tax reliefs that can be claimed. For an individual you will need to file a CGT Return within 30 days and pay over any tax owing so it’s essential to review this prior to sale so that you know what to expect.
MAKING TAX DIGITAL (MTD) FOR LANDLORDS
The current MTD rules for business will soon be extended to include landlords from 6 April 2023. This means that all landlords, both individuals and other structures, will need to keep digital records and submit quarterly information to HMRC. Those clients wanting to continue to use spreadsheets for record keeping can do so, as long as they use HMRC approved bridging software to file their information. Alternatively you can use cloud accounting to computerise your systems, this is accessible on any device and you’ll have up to date financial information about your business at your finger-tips.
INCOME SOURCES
There are many different ways to invest on property - BTL, HMO, Rent2Rent, flip, trader, FHL, Airbnb, serviced accommodation and rent a room. Each one has varying tax implications so it’s essential to know what applies to you.
MORTGAGE INTEREST RELIEF
With HMRC restricting tax relief on mortgage interest over the last few years, this has caused many individuals to suddenly have a much larger tax liability on their property income each year. Not only that, as the mortgage interest is not seen as an expense, but as a tax reducer, then their gross income is now higher, this can push other income into higher rates of tax and may now give you a child benefit charge.
REVENUE EXPENSES VS IMPROVEMENTS
It is essential to any property investor that they understand the difference between tax deductible expenses and capital improvements. Spending money now on improvements may improve the rate of return but you won’t get tax relief on these costs until you dispose of the property.
OWNERSHIP AND STRUCTURE
We can assess your current and future plans in building your property portfolio and advise on your structure options to put forward a proposal that works best for you. This is regularly reviewed to ensure it continues to work for you and also assist in changes if necessary.