Sensible Tax Planning for Property Investors

Britons have had a longstanding love affair with the property market and many of the country’s richest people have gathered their wealth through acquiring and retaining property. However, for those who have invested in property over the years, prudent tax planning is vital if they want to hang on to as much of their money as possible.

Seeking out advice about your property portfolio’s tax implications as early as possible is wise, as the long term liabilities could prove to be detrimental were they to be left unchecked. Forming a strategic plan of action is by far the best way to proceed if you wish to maintain and enhance the overall value of your investments.


You should find out the tex implications on your property portfolio as soon as possible.

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Forming an investment company

One area that demands investigation is the formation of an investment company in which you would be able to hold your property. When property is held in such a company, the transference of shares becomes much more tax efficient and the total value of those shareholdings is often less than the full company when judged on an asset basis.

Forming a company within which to hold your investments would ideally be done prior to any investments being made. That way, any new purchases would simply be acquired by the company itself and held within its own portfolio. The likelihood is, however, that you will already have assets in your possession that you would now like to transfer into an investment company.

While this is possible, the problem is that doing so will likely incur considerable tax liabilities and the transference effectively represents a disposal of the assets, making them liable to any capital gains tax due as they will now be realised. There is capital gains tax relief for instances where businesses incorporate but, in the overriding number of property investment cases, HMRC will view that this falls outside of the relief’s boundaries, leaving any capital gains tax payable. Stamp duty land tax will also need to be paid in this instance.

One way around these charges is for the property owner to leave the portfolio to their surviving spouse. They will then be able to transfer the assets to a newly formed company without the capital gains, meaning that only the stamp duty land tax will be payable.


Starting or joining a property investment company is a great way to get tax benefits.

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Existing property companies

If you have already been using a company to conduct your property investments, you will still need to consider just how you intend to disperse your shares to family members in a tax efficient manner. Inheritance tax is not incurred on any gift of shares given to a family member providing the donor lives for seven years after the gift was made.

When dealing with such matters, however, astute financial advice is always advised as each portfolio is different and the amount of shares gifted must be tactically planned in order to ensure that any chargeable gains are eliminated in terms of capital gains tax purposes.

Reorganising your family’s holdings can have a dramatic impact on the amount of tax you will have to pay, and could result in a significant increase in the overall value of your portfolio. Building a strategy early on will serve both you and your family well. So, no matter how small your initial investment may be, always ensure that you take advice from the start as it could make a big difference to the way your investment portfolio ends up.


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