PROPERTY TRANSACTIONS
Everyone seems to be getting involved in property these days and even the television is full of property programmes but property transactions tend to bring with them a whole host of planning opportunities and pitfalls as many taxes interact. Entering into property transactions without first obtaining tax advice would be like erecting a building without obtaining planning permission……..you may regret it later.
PGS
Talking of planning permission watch out for the proposed planning gain supplement expected to come into force in 2009. This will be a tax charge maybe at 17 or 20% (the details are still to be decided); it will be based on the difference between the current use value and the value with planning permission. It is expected that the obtaining of planning permission will crystallise the new tax charge which will then be due for payment within 60 days after the development has commenced. If this could affect you seek advice now. You may need to keep watching here as it appears that the proposals are not to be introduced at the next parliamentary session. So watch this space as the proposals may be changing.
PROPERTY INVESTORS
Whether the property is residential or commercial and whether it is held personally, via a trust or in a company will impact on the tax charge on an eventual sale which could range from say 10% to 40%. After 6 April the new flat rate of 18% will mean that some of you will pay more tax on an eventual sale and some of you will pay less.
With forward planning the property can be acquired in the correct structure for your personal circumstances from the outset such that tax is minimised.
If you currently hold investment properties and are looking to sell them it may be possible to minimise the tax exposure with a little further planning.
Property investments increase your estate for inheritance tax purposes whether you hold them personally or via a company. However in certain situations it may be appropriate to hold them via a trust to minimise your exposure to IHT.
PROPERTY DEVELOPERS
Property developers may be involved in trading or capital transactions and it is important to know which applies from the outset as this will impact on the tax treatment of the transactions.
When trading the desire for limited liability may be a driving force behind the chosen structure but this is no longer restricted to the limited company. Limited liability partnerships are available which are taxed as partnerships but also provide the limited liability.
In certain situations property developments situated in the UK can be carried on by offshore entities which can form a useful part of long term planning and offer significant tax benefits.
POSSIBLE RELIEFS
People often forget that they may be able to claim capital allowances on certain developments if they are holding them as investments
If you are renovating an unused property to be used as business premises in a disadvantaged area you may be able to obtain tax relief for all of that capital expenditure as it is incurred.
Where flats are converted over shops additional tax reliefs may apply
Furnished holiday lettings attract beneficial tax breaks
Where there is contaminated land which needs to be cleaned up advice should be sought because if developments are structured correctly it may be possible to claim enhanced tax relief in respect of the costs of cleaning up that land.
There are so many taxes to consider with property transactions and there may be some tax reliefs to be claimed. Advice should always be sought at the outset before the property is acquired and as time passes and intentions change.
Everyone seems to be getting involved in property these days and even the television is full of property programmes but property transactions tend to bring with them a whole host of planning opportunities and pitfalls as many taxes interact. Entering into property transactions without first obtaining tax advice would be like erecting a building without obtaining planning permission……..you may regret it later.
PGS
Talking of planning permission watch out for the proposed planning gain supplement expected to come into force in 2009. This will be a tax charge maybe at 17 or 20% (the details are still to be decided); it will be based on the difference between the current use value and the value with planning permission. It is expected that the obtaining of planning permission will crystallise the new tax charge which will then be due for payment within 60 days after the development has commenced. If this could affect you seek advice now. You may need to keep watching here as it appears that the proposals are not to be introduced at the next parliamentary session. So watch this space as the proposals may be changing.
PROPERTY INVESTORS
Whether the property is residential or commercial and whether it is held personally, via a trust or in a company will impact on the tax charge on an eventual sale which could range from say 10% to 40%. After 6 April the new flat rate of 18% will mean that some of you will pay more tax on an eventual sale and some of you will pay less.
With forward planning the property can be acquired in the correct structure for your personal circumstances from the outset such that tax is minimised.
If you currently hold investment properties and are looking to sell them it may be possible to minimise the tax exposure with a little further planning.
Property investments increase your estate for inheritance tax purposes whether you hold them personally or via a company. However in certain situations it may be appropriate to hold them via a trust to minimise your exposure to IHT.
PROPERTY DEVELOPERS
Property developers may be involved in trading or capital transactions and it is important to know which applies from the outset as this will impact on the tax treatment of the transactions.
When trading the desire for limited liability may be a driving force behind the chosen structure but this is no longer restricted to the limited company. Limited liability partnerships are available which are taxed as partnerships but also provide the limited liability.
In certain situations property developments situated in the UK can be carried on by offshore entities which can form a useful part of long term planning and offer significant tax benefits.
POSSIBLE RELIEFS
People often forget that they may be able to claim capital allowances on certain developments if they are holding them as investments
If you are renovating an unused property to be used as business premises in a disadvantaged area you may be able to obtain tax relief for all of that capital expenditure as it is incurred.
Where flats are converted over shops additional tax reliefs may apply
Furnished holiday lettings attract beneficial tax breaks
Where there is contaminated land which needs to be cleaned up advice should be sought because if developments are structured correctly it may be possible to claim enhanced tax relief in respect of the costs of cleaning up that land.
There are so many taxes to consider with property transactions and there may be some tax reliefs to be claimed. Advice should always be sought at the outset before the property is acquired and as time passes and intentions change.