12 Days of Property – Tax Planning 2021

12 Days of Property – Tax Planning 2021

9:57 AM, 6th January 2021, About 5 months ago 3

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Mark Alexander​ founder of Property118.com and landlord takes a look at Property Investors tax returns and share his advice on landlord tax planning as part of our 12 days of property.

January is the month of the self-assessment deadlines and tax returns. Last January we brought you Mark Smith​ a Tax Barrister for Property118 see video below

Mark asks landlords – Do You know how Section 24 has affected your income?

We dive into the proposed Capital Gains Tax changes CGT and the tax allowance changes exploring the 4 different CGT tax bands and the annual CGT allowance.

We discuss whether bringing back an indexation allowance on capital projects is a good idea using the Year 2000 to rebase your properties or is just something to keep accountants busy.

We then turn to look at the myth that you need to refinance when you incorporate your portfolio referring to HMRC manual.

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Comments

by Andrew

11:43 AM, 6th January 2021, About 5 months ago

Some great content shared thank you

by Chris Novice Shark Bait

13:33 PM, 7th January 2021, About 5 months ago

Very interesting Mark. We have held off booking a consultancy with you, knowing that all circumstances are different, and we have had, and still have extraordinary challenges relating to Mortgage Express.
We do have property specialist accountants now and they have advised us that our very considerable carry forward I.T. losses would have been extinguished at the point of incorporation. We find we are growing Property Finance charges Relief, to replace the declining CFIT reliefs and as an unmarried couple can in fact redistribute profits as we are so advised on an annual basis. So as section 24 bites on paper, we are well buffered and can continue for a few years yet without being affected. We have made some mitigation steps. Sold 2 properties and redeemed one mortgage. This we thought might see us through. The proposed CGT changes however are another matter and of serious further concern.

by Andrew

14:55 PM, 7th January 2021, About 5 months ago

Reply to the comment left by Chris Novice Shark Bait at 07/01/2021 - 13:33
Chris
This is a great post and demonstrates one size doesnt fit all. I would also suggest you take a big picture look at what you are doing / being advised.

By all means sell of non performing properties and restructure gearing if it is the optimal thing to do for your business

My advice is take take a wholistic look at all taxes and work several calculations out to find the optimal solution. Mark will do that as part of the process.

Examples of what I mean are
1> Continue as you are until all personal IT losses used up
2> Would you pay less total tax IT CT CGT SDLT by incorporating before all losses used up?
3> What is the optimal timing to begin the process so as IT are used up it switches within a very small timeframe so you arent clobbered with Section 24
4> What possible changes could impact your decisions
5> Depending on age / family circumstances how does this sit with your IHT planning a tax often over looked when worrying about today we forget the whole of life tax cost

Hope thats useful food for thought


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