Property Income

Property Income

Rental income received from buy-to-let accommodations and investment properties represents an important source of income for many investors. Over the last few years, however, legislation has been introduced which greatly reduces the amount of relief available to investors.

What are the issues?

Landlords who pay tax at the higher rate of 40% face important changes to the way mortgage interest is treated for tax purposes. HM Revenue and Customs’ newest rules have reduced the amount of tax relief available on interest payments. This, in many cases, has resulted in additional tax payable by buy-to-let landlords and investors. For this reason investment decisions must be carefully considered and working in conjunction with your accountant is vitally important to ensure that tax liabilities are kept to a minimum. Incorporation is an option and many landlords have decided to use limited companies when purchasing investment properties.

In addition income from buy-to-let accommodation is not normally considered trading income (unless the investor works full-time running the rental business). For this reason losses from investment properties cannot be offset against profits in other trades. This means that some additional relief available to business owners are not normally available even when the property investment business comes to an end. 

We can assist by applying the best method to minimise your tax liabilities.

Contact us to discuss the advantages and disadvantages of running a property business as a limited company.

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