Are you making the most of tax concessions on property?

Discussion in 'Property Tax and Accounting' started by nmb, Feb 14, 2016.

  1. nmb

    nmb Well-Known Member

    Even though the UK government is looking to close a number of loopholes which have proved particularly lucrative for those acquiring buy to let properties in the UK, there are still ways and means of reducing your property related tax liabilities. While many people might prefer to do their own “books”, using an accountant will very often save you a significantly larger amount of money than they charge to put your accounts together.

    If you have a relatively simple straightforward portfolio then there may be scope to do your own books, but are you still making full use of all tax concessions?
  2. Nicholas Wallwork

    Nicholas Wallwork Editor-in-Chief Staff Member Premium Member

    I use very good accountants and have upgraded my choice of accountants and book keepers over the years to keep up with the demands and size of our portfolio. As your property business grows and becomes more successful you'll find you out grow some advisors as well...

    The trouble with tax planning I find is so long as you think you have an effective tax plan, the laws change and you have to alter your strategy. I'm all for paying the correct amount of tax of course but proper planning is a must to ensure you aren't paying too much tax for your situation.

    It also depends on the situation for your particular deal and if you know what you want to do with a property from the off... For example if you want to sell the property sooner rather than later then you'll possibly buy it in your personal name rather than a company... So if you change your mind about selling after say 6 months you now have the wrong tax plan!

    I've recently decided to sell a property that was bought 2 years ago and was never intended to be sold (it's out of area and will give the business some great cash flow to expand further!). The trouble is I'll now have to pay more tax than is technically possible if I'd bought it in a more effective way in the first place... The end result - I'll have to pay the higher tax!

    As you get more experienced you'll learn which properties you'll likely keep for longer and those that are more likely to get sold on, so you can make a better judgement how to structure them for the best possible tax situation.

    I would recommend leaving your books and accounts to the right professionals so that you can concentrate on building and maximising your business...
  3. nmb

    nmb Well-Known Member

    The UK tax system is actually one of the most complicated in the world although governments continue to ignore calls for simplification. This is probably one of the main reasons why it is sensible to use an accountant if you have a "decent" sized property portfolio because the professionals are likely to unearth ways to reduce your tax that you were probably not aware of.
  4. KGeeson

    KGeeson Property Forum Staff Forum Partner

    If you are quite new to investing, or are retiring and have just 1 investment property (for example), is it worth paying for an accountant with specialist property experience, or do you think you only need to do this when you have a portfolio of a certain size?
  5. nmb

    nmb Well-Known Member

    A lot of this will depend upon the cost of your accountant but on the whole where there are potentially complicated tax issues to consider I think professional advice should be sought. Even for a relatively small portfolio it would not take an awful lot for your accountant to find ways to cover their costs.
  6. nmb

    nmb Well-Known Member

    If you have long-term plans to invest in the property market via multiple properties then there is also the issue of how you structure your investments to limit your tax liabilities. It may look simple managing your books for one property asset but what if this expands to 2, 3 and more?
  7. lookinginvest

    lookinginvest Member

    Always good to refresh your tax options on a regular basis as the government seem to be changing tax laws more often today than they ever have. You don’t want to miss out on any tax breaks!
  8. Sumit Agarwal

    Sumit Agarwal New Member

    Given the recent changes in buy-to-let market, specialised tax advice is required to understand the complicated regime created by HMRC. Professional advice means there is more transparency and surety that you are making most of the tax reliefs available. In my opinion no portfolio is small as long as there is scope to save tax – ‘money saved is money earned’.
  9. nmb

    nmb Well-Known Member

    Why the authorities don't create a much simpler taxation system when it comes to investment is beyond me. Why make things more complicated than they need to be? I have read on numerous occasions that the net gain on collecting capital gains tax is minimal.

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