- Buy a property in the
most tax-efficient manner!
Consider buying property
jointly with your partner to potentially use both your
Capital Gains and Income tax allowances.
Even better, renting out
your existing property might help you to benefit from a
whole raft of capital gains allowances!
- Choose a property
investment strategy that saves you tax!
If you buy property to
'renovate and sell', then you will be taxed differently
than if you only 'buy and let' property.
For instance, if you buy
and sell property, your gains may be taxed as Income
rather then Capital Gains.
This means that you need
to establish how and which taxes (Income Tax and/ or
Capital Gains Tax) will be applied to your property
investments.
Once you know how tax
will be assessed on your investments, then - and only then
- can you establish a tax minimising strategy.
- Offset ALL costs against
income!
Offset as many costs
against your rental income as possible, to genuinely
reduce your bill! Many people are not aware of the
numerous costs that can be offset against your property
income.
For instance maintenance
insurance policies on white goods, gas boilers and
plumbing cover, which insure your property against any
leaks or problems, can all be offset against rental
income.
- Plan for the future and
benefit your family!
In 2020 the average house
is predicted to cost £330,643. This will create an
Inheritance Tax bill of £32,257.20 for the property alone,
if allowances continue to stand still.
It also means that the
inheritor may be forced to sell the family home in order
to pay the tax!
Many people are using
trusts and gifting options to reduce their potential
liabilities to this tax.
- Get a good accountant
and cut his costs too!
Poor tax planning and
accounts management means bigger accountancy bills -
sooner or later!
By learning about
Property Tax early on in your investment career, you can
not only reduce your tax bill, but also by presenting
better accounts, you will cut your accountancy bill too.
What is more, the better
informed you are about tax - the better questions you can
put to your accountant, and the better answers you'll
receive.
- Don't forget to tell the
taxman!
Make sure you tell the
taxman that you are receiving income from property! If you
don't tell him now, then when he catches up with you, you
probably won't be able to afford to pay him, after he
fines you!
- Investigate tax sooner
rather than later!
Lastly, many tax benefits
require the investor to plan for tax ahead of investing.
Hence, the sooner you tackle the issue of Property Tax,
the more you'll be able to cut your tax bills and
liabilities.