Essential Considerations Before Selling Your Rental Properties

Essential Considerations Before Selling Your Rental Properties

10:03 AM, 17th August 2023, About 10 months ago 6

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When it comes to the decision of selling your rental properties, your thought process is respected. However, before taking the leap, it’s crucial to delve into some essential aspects that might influence your choice. One such critical factor is Capital Gains Tax (CGT), which can significantly impact your financial outcome.

The Case for Incorporation: For landlords operating as unincorporated entities, considering incorporation could prove highly beneficial, especially in relation to CGT. This strategic move allows you to potentially minimize your CGT obligations. How? By incorporating. Historical capital gains attributed to your properties can be rolled into the shares within the newly formed company. As a result, the burden of CGT at the point of sale can be greatly reduced or even eliminated. Consequently, if the company chooses to sell these properties in the future, it will only be subject to corporation tax on the appreciation in value that occurred post-incorporation. This means that any gains accumulated from the time of acquisition at market value during the incorporation process will be the primary focus for taxation, potentially resulting in a more favorable financial outcome.

Conclusion: Before making any decisions regarding the sale of your rental properties, it’s imperative to consider the implications of Capital Gains Tax. Incorporation offers a strategic avenue to manage and potentially minimize your CGT obligations. By transferring historical gains into company shares, you can position yourself for a more advantageous taxation scenario when selling properties in the future. Taking this into account, it’s wise to thoroughly explore the option of incorporation with our help before finalising your course of action.

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Comments

Sanjeev Markanday

10:24 AM, 18th August 2023, About 10 months ago

As I understand any capital losses from shares etc can be used against the gain in one's buy to let . I take it this adjustment is made during the calculation of one's total Capital gains and NOT in the tax paid to HMRC? In which case one's capital gains losses are only reduced by 28% at best . However if it was the latter then one would realise their entire capital gains losses!

Sanjeev Markanday

10:24 AM, 18th August 2023, About 10 months ago

As I understand any capital losses from shares etc can be used against the gain in one's buy to let . I take it this adjustment is made during the calculation of one's total Capital gains and NOT in the tax paid to HMRC? In which case one's capital gains losses are only reduced by 28% at best . However if it was the latter then one woukd realise their entire capital gains losses!

Lordship

10:50 AM, 18th August 2023, About 10 months ago

Maybe you could publish any reasons why you should not incorporate or where it would not be of financial benefit.
Perhaps,if you own some properties in sole name and others in joint names.

If your sole income is from your portfolio.

If you don't have dependants.

If you intend to sell off some property to be debt free or low debt on others.

Or any other reasons where it may not make sense.

Sheridan Vickers

14:19 PM, 18th August 2023, About 10 months ago

I own two flats. I want to sell one as I've got a nightmare tenant who owes over £3000 and is my bro-in-law and he's already given us two dates when he'll be moving out but still there. I don't really want to sell but don't want to feel like I'm handing over my property to another lowlife who is encouraged by the law to live there for free. I just don't get how this is fair or legal. I know I can serve section 8 notice but why should I wait a year or more for it to reach court and still not getting any income? They think we're all high earners. I don't even earn £20000 myself a year and my husband bought two properties with his compensation money because he can't work after a serious motorbike accident. He's not entitled to any benefits because he doesn't fit the criteria. My bro -in-law gets universal credit and has no commitments and they are only paying us£231 a month when the rent is £800. He also works and earns £180 a day and gets paid part cash and some on the books so he's in control of what we get and that stupid government and the like are saying we've got to take on people on benefits. There's no way I'll even consider it ever. Damn right cheek. So would I be better off forming a company for my two flats? I can't afford anything and would like to get legal aid just like those to pay for notices to serve on my tenant. His rent is to help us pay our own mortgage which has gone up 14 times or more this year and that's without service charges, mortgage on the flat where I'm receiving no rent and insurance etc. There's no help for us and they expect us to keep sane. I'm done with it all and probably will end up in prison due to losing control of the situation and my sanity by the unfairness of it all

Russell Cartner

19:05 PM, 18th August 2023, About 10 months ago

Accelerated Sec 21 do it now. Any tenant with rent arrears will not be helped by council. It will cost you, but its already has and will continue to do so unless you grow some

Landlord of 25 years

11:28 AM, 20th August 2023, About 10 months ago

Reply to the comment left by Sheridan Vickers at 18/08/2023 - 14:19
Hi
If your brother in law is in receipt of universal credit and he is in rent arrears you can apply to have the rent paid directly to you however you really want him out. Collect evidence that he is working in contravention of his benefits settlement then tell him if he doesn't pay you what he owes and get out on X days you will report his fraud. I d serve a section 8 anyway because it costs you nothing and positions you to go to court in 2 months time if he's not out. Don't waste any more time. Its costing you anyway. Bite the bullet and get serious with him. IF you ever have to go to court then do it via a proper company. I used eviction specialist lawyers and it was worth every penny. Best of luck .

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