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I have been informed that the solution to s.24 for portfolio landlords is to switch your properties to a partnership for 3 years and then to a compamy.
You then pay no stamp duty and no CGT.
Seems very sensible especially if you get HMRC clearance.
What do you think?
I cant see that working maybe a transfer to a wife or husband but not to anyone else
and even if that did work you would still pay CGT and stamp duty when you sell onto your company
its classed as a ful sale and a full buy back you cant just transfer it
Learn Change and Adapt ?????
All I will say is from a tax point of view being a sole trader and receiving profits as a partnership will be taxed in the same way, it just means that you will be sharing your rental profits with a partner rather than as a sole trader.
If you however have rental accounts that have profits shared already, changing to a partnership really makes no difference to how your tax is worked out.
You are also required to do two tax returns rather than one.
If you are looking to keep the properties for retirement, remember the stamp duty you pay can be offset when you sell the properties in the future, its not lost money.
Accountant | Wayne Ashcroft Limited
Tel: 07828 882400 | Email: firstname.lastname@example.org
I have seen this reference to the extra stamp duty not being lost money as it can be offset against CGT, but if my understanding is correct that will only save you 18% or 28% depending on your CGT rate so most of it is lost money or am I misunderstanding this?
all cost involved in the purchase are used when you come to sell
and don't forget the selling cost are tax deductible too
and any major capital improvements too
You refer to the cost being tax deductible which implies that the cost is deducted from the tax due, the post above refers to being able to offset stamp duty and is therefore not lost money, my understanding is you can deduct these from any gain, therefore any saving is equivalent to the CGT amount on that amount and not the entire expense. The two are very different.
you add all costs and sales figs against the price you have paid when you first purchased the property
you pay CGT on the rest minus your allowances ?
I think we mean the same thing but expressing it differently.
yes I think so
My apologies if the way I put it confused you, how the other person explained it was what I meant.
Too many people are looking at the Stamp Duty as a cost they lose, but you do not lose that money it comes off your sales figure as a cost and therefore you only pay tax on the gain after taking your costs away.
People are scared of this stamp duty, but if people are looking to keep these properties for 15-20 years and build a pension fund like most of my clients, then that Stamp Duty although a cost no one wants to pay, it’s not that bad a deal and you make back that cost over the 15-20 years in the mortgage interest you have been able to offset and not pay Corp Tax at 19% on.
The fact is at some point when owning properties, you will have to pay tax when you sell that property, at least as a company and the property is a long term investment and you offset the mortgage interest over the length of the investment, you are getting the highest tax relief over that period of the investment.
As I say at some point you will have to pay tax, but you will save personal tax in your retirement when you have the retained profit sitting in the companies reserves and you will have the opportunity of how you distribute that money based on the tax system at that time.
It’s the government who will lose out in the long term and part of me thinks they know this and want to look hard on landlords in the public, but I bet most politicians are landlords themselves, so they have probably looked at their best interests in the process.
The Govt are no fools S24 has shown what they can do to Investments especilay BTL
The Govt will see Landlords buying via Ltd Co
and I think it would be naïve to think the govt wont Tax Ltd Co in the same way as S24
Labour are the biggest threat to this Policy they have already said Corp tax will rise to I think 28%
we are far from out of the woods I believe we are only at the edge of the woods
The Govt do want Co Landlords but they don't want us be it In a company or in our own names
It wants Build To Rent
we are seen as taking housing stock not adding to it in general
You are correct in your comments but I would not think to long term It may well change soon
especially if Labour come to power and rent control will follow too
We are ok for now but I am not betting my shirt that we will not see more attacks on the PRS