Did you know that if everybody who purchased an investment
property three years ago sold it today, then there would
be an £800million capital gains tax liability?
Here are 7 legitimate steps to help you start cutting your
bills...
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.
More information available from: www.PropertyTaxSecrets.co.uk
