Reducing tax on investment properties
By Niall Murphy
Many landlords hold their properties personally. This means that income received on rental properties is charged at income tax rates of up to 45 per cent. When the property is sold, capital gains tax (CGT) is chargeable at up to 28 per cent.
In contrast, rental income profits and gains in a company are charged to corporation tax at a maximum of 21 per cent and, where a property is sold by a company, an indexation allowance is given to reduce any taxable gain it makes on the sale.
However, in order to access the more favourable tax treatment provided by corporate ownership, it is necessary to transfer the rental properties into the company, which normally triggers a CGT charge. While there are provisions deferring a tax charge on the transfer of assets to a company, these only apply where the asset is a business asset rather than an investment asset…
Click on the link below to read the rest of the Shoosmiths briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from Shoosmiths
News from The Lawyer
Briefings from Shoosmiths
The unilateral actions of one landlord could spark a chain of events that determines the entire lease
A quarter of all road traffic incidents involve people driving as part of their work, and taking work-related road risk seriously is a legal requirement.
Analysis from The Lawyer
Compliance and corporate governance codes for large financial institutions will undoubtedly include provisions to regulate high pay in the future
There’s more to the ABS model than attracting the man in the street and procuring external investment. Partners at the big corporate firms, take note…