What does your accountant know about property investment and tax? 3


To Let

Property Investment is probably one of the most complicated tax and accounting activities that exists, it can involve:

  • Stamp Duty (SDLT)
  • Income Tax
  • Corporation Tax
  • ATED
  • Capital Gains

And some activities also involve Pensions, Capital Allowances, VAT, CIS…. the list goes on and on

The internet is full of experts but often their advice is conflicting and some of the advice is actually wrong!

Experience gained from working with investors is the key to knowledge and continuous training and updating is vital. We have written hundreds of blogs on tax and accounting.

One of the biggest recent changes is Section 24 restricting interest relief

Landlords will no longer be able to deduct all of their finance costs from their property income to arrive at their property profits. They will instead receive a basic rate reduction from their income tax liability for their finance costs.

Landlords will be able to obtain relief as follows:

  • in 2017 to 2018 the deduction from property income (as is currently allowed) will be restricted to 75% of finance costs, with the remaining 25% being available as a basic rate tax reduction
  • in 2018 to 2019, 50% finance costs deduction and 50% given as a basic rate tax reduction
  • in 2019 to 2020, 25% finance costs deduction and 75% given as a basic rate tax reduction
  • from 2020 to 2021 all financing costs incurred by a landlord will be given as a basic rate tax reduction

The rules don’t apply to companies

I also think that having actual property and construction experience is beneficial.

Back in 2003, we started investing in property with a group of friends and colleagues.

We started by forming a limited company and our first purchase was 3 shops (eastern Eye, Maximum and LMJ) with 8 HMO’s above, there is a picture below

510

We then went on to buy 6 shops with flats above on long leaseholds, we did a title split and put 3 of the shops into SIPP Pensions

691

We then formed another company and purchased a block or 7 HMO’s.

We also bought an Office Block, Industrial Unit and Shops into SIPP and SSAS pensions.

We sold our investment in the companies and focused on commercial property investments in pensions.

steve@bicknells.net

3 comments

  1. Hi Steve,

    I jointly run several property Network meetings in the South East of England.

    One of them is for quite adventurous entrepreneurs who I believe would potentially benefit from your services.

    As such i wonder if you would like to come down and present your services to them

    We are Portsmouth based Po8 9na

    regards

    Allan

    • Hi Allan

      Tell me more, as you might know I am regular at PPN and Property Hub, how many members do you have? generally I just stick to presenting in locally but I do work with investors from a wider area, I have several in London

      Kind regards

      Steve

  2. Pingback: What does your accountant know about property investment and tax? – Magnetic Video Marketing

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s