| About the Authors |
|
Arthur Weller-The Property Tax Specialist
Amer Siddiq-The Property Investor
Acknowledgements
|
| Knowing Your Property Tax Strategy |
| 1. |
Understanding your Tax Liabilities |
| How to Slash your Property Income Tax |
| 2. |
Income Tax Liabilities for Investors/Traders |
| 2.1. |
Property investor |
| 2.2. |
Property traders/dealers |
| 2.3. |
Income Tax Rates |
| 2.4. |
Income Tax Calculation Case Studies |
| 2.4.1. |
Income tax calculation for property investors |
| 2.4.1. |
Income tax calculation for property developers |
| 3. |
Owning Properties as a Sole Trader |
| 3.1. |
Buying Properties as a Sole Trader |
| 3.2. |
When is it Tax Efficient to Buy Property as a Sole Trader? |
| 3.3. |
When is it NOT Tax Efficient to Buy Property as a Sole Trader? |
| 3.4. |
How Do I Get a Mortgage If I Have No Income? |
| 3.5. |
A Note About Selling Properties When Operating as a Sole Trader |
| 4. |
Income Tax & Property Partnerships |
| 4.1. |
What is a Property Partnership? |
| 4.1.1. |
Joint tenants |
| 4.1.2. |
Tenants in commons |
| 4.2. |
When to Consider Buying in a Partnership |
| 4.3. |
Having a Partner who is a Lower-Rate Taxpayer |
| 4.4. |
Partners Must Be TRUSTWORTHY |
| 4.5. |
Partnerships Between Husband and Wife |
| 4.6. |
Partnerships Between Those Other Than a Husband and Wife |
| 4.7. |
How to Declare a Partnership Split to the Inland Revenue |
| 4.8. |
Moving Properties Into Joint Ownership to Avoid Income Tax |
| 4.8.1. |
Three simple steps to follow for moving into joint ownership |
| 4.8.2. |
Typical costs incurred when transferring |
| 5. |
Offsetting Interest Charges |
| 5.1. |
Interest on Mortgages |
| 5.2. |
A note about ‘interest only’ and ‘repayment mortgages’ |
| 5.2.1. |
Interest Only Mortgage |
| 5.2.2. |
Repayment Mortgage |
| 5.3. |
Interest on Personal Loans |
| 5.3.1. |
Loan used for providing deposit |
| 5.3.2. |
Loan used for refurbishments/developments |
| 5.3.3. |
Loans used for purchasing products |
| 5.3.4. |
Loans to continue the running of your business |
| 5.3.5. |
Interest on overdrafts |
| 5.4. |
When You Cannot Offset the Interest Charged on Personal Loans |
| 5.5. |
Interest on Re-mortgages |
| 5.6. |
Purchasing a Property With Cash and Then Re-mortgaging |
| 5.7. |
Interest Paid When Using Credit Cards |
| 5.8. |
Understanding paragraph 45700 |
| 5.8.1. |
Benefiting from Interest Relief When Buying Off-Plan |
| 5.8.2. |
Benefiting from Interest Relief When Letting Out Your Own Home |
| 6. |
10% Wear and Tear or Renewals? |
| 6.1. |
What is the 10% Wear and Tear Allowance? |
| 6.2. |
Understanding When the Allowance Can Be Used |
| 6.3. |
Understanding the ‘Renewals Basis’ Method |
| 6.4. |
How to Decide Which Method to Use |
| 7. |
Getting to Grips With the Term ‘Wholly and Exclusively’ |
| 7.1. |
Understanding the Term ‘Wholly and Exclusively’ |
| 7.2. |
What If Cost is Not Wholly and Exclusively Incurred for Property? |
| 7.3. |
Costs of Maintenance and Repairs |
| 7.4. |
Typical maintenance/repair costs |
| 7.5. |
Initial cost of maintenance/repair |
| 7.6. |
Capital improvements |
| 8. |
Replacing Your Fixtures and Fittings |
| 8.1. |
What are Fixtures and Fittings? |
| 8.2. |
Replacing Fixtures and Fittings |
| 8.2.1. |
Like-for-like replacement |
| 8.2.2. |
What if it is not possible to replace with like-for-like? |
| 8.2.3. |
Like-for-like replacement but with capital improvements |
| 8.2.4. |
Replacement with superior fixtures and fittings |
| 9. |
Other Ways to Reduce Your Income Tax Bill |
| 9.1. |
Rents, Rates, and Insurance |
| 9.1.1. |
Rents |
| 9.1.2. |
Rates |
| 9.1.3. |
Insurance |
| 9.2. |
Can I Offset Pre-trading Expenditure? |
| 9.3. |
Carrying Over Rental Losses |
| 9.4. |
Travelling Costs |
| 9.4.1. |
Car petrol usage |
| 9.4.2. |
Public transport |
| 9.4.3. |
Travelling costs for overseas property |
| 9.5. |
General Property Costs |
| 9.6. |
Storage Costs |
| 9.7. |
Other Common Landlord Expenditures |
| 9.8. |
Can I Offset the Cost of a £5,000 Property Seminar? |
| 9.9. |
Capital Allowances for landlords |
| Companies and Property Taxes |
| 10. |
Can a Limited Company Improve YOUR Tax Position? |
| 10.1. |
The Most Commonly Asked Tax Questions |
| 10.2. |
Transferring Properties Into a Limited Company |
| 10.3. |
Understanding ‘Limited Liability’ |
| 10.4. |
Three Major Tax Benefits of Using a Limited Company |
| 10.4.1. |
Benefits |
| 10.4.2. |
Drawbacks |
| 11. |
How to Use a Property Management Company to Save Income Tax |
| 11.1. |
Do You Pay Tax at Less Than 40%? |
| 11.2. |
Saving Tax by Using a Property Management Company |
| 11.3. |
Draw Up Formal Contracts Between You and Your Company |
| 11.4. |
Beware of Artificial Transactions! |
| Stamp Duty Land & Property Tax |
| 12. |
Saving on Stamp Duty |
| 12.1. |
When Do Property Investors Pay Stamp Duty? |
| 12.1.1. |
Stamp duty when buying new land or property |
| 12.1.2. |
Stamp duty when transferring a property |
| 12.2. |
Stamp Duty Exemption for Deprived Areas |
| 12.3. |
Stamp Duty Loophole Closed |
| 12.3.1. |
Inland Revenue anti-avoidance measure |
| Other Property Investment Strategies |
| 13. |
Tax-Free Income for Renting Out Part of Your Home |
| 13.1. |
What is the Rent-a-Room Relief? |
| 13.2. |
Choosing Not to Use the Relief |
| 13.3. |
Renting Out in Joint Ownership |
| 14. |
Generous Tax Breaks for Holiday Lets |
| 14.1. |
Qualifying Criteria for a Holiday Let |
| 14.2. |
Three Generous Tax Benefits Associated With Holiday Lets |
| 14.2.1. |
Offsetting losses against other income |
| 14.2.2. |
Re-investment of capital gains |
| 14.2.3. |
Business asset taper relief |
| How to Slash Your Property Capital Gains Tax |
| 15. |
Understanding Capital Gains Tax (CGT) |
| 15.1. |
When You Are Liable to Pay CGT |
| 15.2. |
How Your CGT Bill is Calculated |
| 16. |
Avoid CGT by Using ‘Private Residence Relief’ |
| 16.1. |
What is Private Residence Relief? |
| 16.1.1. |
Full residence relief |
| 16.1.2. |
Partial residence relief |
| 16.2. |
How Long in a Property Before It Can Be Classed as My PPR? |
| 17. |
The EASIEST Way to Legitimately Avoid CGT |
| 17.1. |
Understanding the ’36-Month Rule’ |
| 17.2. |
How to Use the 36-Month Rule to Your Advantage |
| 17.3. |
Wiping Out CGT by Using Private Letting Relief |
| 18. |
Increasing Property Value and Avoiding Tax |
| 18.1. |
No CGT on the First 12 Months of Ownership |
| 18.2. |
Using the Rule to Grow a Portfolio Without Paying CGT |
| 19. |
Avoid CGT by Maximising Length of Property Ownership |
| 19.1. |
Properties Purchased Before 1982 |
| 19.2. |
Indexation Relief |
| 19.3. |
Non-business Taper Relief |
| 19.4. |
Bonus Year of Taper Relief |
| 20. |
Nominating Residence to Avoid CGT |
| 20.1. |
Having More Than One Family Home |
| 20.2. |
Nominating Your Residence to the Inland Revenue |
| 21. |
Other Ways to Reduce Your CGT Bill |
| 21.1. |
Using Your Annual CGT Allowance |
| 21.2. |
Capital Losses |
| 21.3. |
Buying and Selling Costse |
| 21.4. |
Selling at the Right Time Can Save You Tax! |
| 22. |
Beware of the Capital Gains Tax Trap |
| 22.1. |
Starting to Grow the Portfolio |
| 22.2. |
Remortgaging to Continue the Portfolio the Growth |
| 22.3. |
The Property Millionaire |
| 22.4. |
The Multi-Millionaire Who Can’t Afford to Sell a Property |
| 22.5. |
How to avoid and overcome the ‘Capital Gains Tax Trap Problem’ |
| 22.5.1. |
Hold the properties and don’t sell |
| 22.5.2. |
Emigrate |
| 22.5.3. |
Transferring to a company |
| 23. |
Using Property Partnerships to Cut Your CGT bill |
| 23.1. |
Making Use of Multiple CGT Allowances |
| 23.2. |
Save Tax by Transferring to Your Husband/Wife |
| 23.2.1. |
Transferring to Lower-Rate Taxpayer |
| 23.2.2. |
Transferring If Spouse Has Registered Losses |
| 23.3. |
Transferring Strategies for Non-spouse |
| 23.3.1. |
Transferring in Stages |
| 23.4. |
Transferring at ‘Arm’s Length’ |
| 24. |
Advanced Strategies for Avoiding CGT |
| 24.1. |
How to Claim an Additional Three Years of PPR |
| 24.2. |
Claiming PPR When Working Overseas |
| 24.3. |
Claiming PPR When Re-locating in the UK |
| 24.4. |
CGT Implications of Providing Property to Dependent Relatives |
| Simple Inheritance Tax (IHT) Planning |
| 25. |
Understanding Inheritance Tax |
| 25.1. |
What is Inheritance Tax? |
| 25.2. |
One VERY Important Point to Note! |
| 25.3. |
FOUR Simple Ways to Reduce Inheritance Tax |
| 25.4. |
Don’t Forget Your Capital Gains Liability |
| 25.5. |
Other IHT Exemptions |
| 25.5.1. |
Completely Exempt |
| 25.5.2. |
Annual Exemptions |
| Tax Strategies for Commercial Property Investors |
| 26. |
Tax Liability for Commercial Property Owners |
| 26.1. |
Three Ways to Slash your Commercial Property Tax Bill |
| 26.2. |
100% Capital Allowances for Flats Over Shops |
| 26.2.1. |
Qualifying Properties |
| 27. |
A Gameplan for Property Investors |
| 27.1. |
Choosing the property wisely |
| 27.2. |
Getting the structure right |
| 27.3. |
Conclusion |
| 27.4. |
The property investor’s TAX-EFFICIENT GAMEPLAN |
| 28. |
Enterprise Zone Trust (EZT) |
| 28.1. |
What is an Enterprise Zone Trust? |
| 28.2. |
Tax Benefits Associated With EZT? |
| 28.3. |
When is It Beneficial to Use an EZT? |
| 28.4. |
Disadvantages of EZT |
| International Property Taxation |
| 29. |
Essential Tax Advice for International Property Investors by Daniel Feingold |
| 29.1. |
About Daniel Feingold |
| 29.2. |
UK People Investing Outside the UK |
| 29.3. |
Tax Advice for Ex-Pats |
| 29.4. |
Tax considerations for people investing in the UK |
| 29.5. |
Location Focus - Spain |
| 29.6. |
Location Focus – France |
| 29.7. |
Summary |
| Good Accountants Do Save You TAX! |
| 30. |
Finding an Accountant |
| 30.1. |
Accountants Qualifications |
| 30.2. |
The difference between a general advisor and a tax specialist? |
| 30.3. |
Three golden rules for finding a good accountant |
| 30.3.1. |
Know your investment/business goals |
| 30.3.2. |
‘Phone a friend’ |
| 30.3.3. |
Drill your accountant |
| Tax Investigations |
| 31. |
Getting to Grips with Tax Investigations |
| 31.1. |
Types of Enquiries/Investigations |
| 31.2. |
How to Cut Your Chances of Being Investigated |
| 31.3. |
How the Inland Revenue Can Find Out About You |
| 31.4. |
What If I Do Get Investigated? |
| Appendix A—Indexation Factors for Calculating Indexation Relief |
| Appendix B – List of Tax Saving Case Studies |
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Contents
