Subscribe to Newsletter
Register to receive our Monthly Newsletter.
Downloads
Select from a range of FREE Downloads.
Mortgage Calculator
A quick way to find out how much a mortgage is likely to cost you.
Best Mortgage Deals
Pick of the best in the market at the moment.
Downloads
Select from a range of FREE Downloads.
Mortgage Calculator
A quick way to find out how much a mortgage is likely to cost you.
Best Mortgage Deals
Pick of the best in the market at the moment.
Cutting Your Property Tax Bills
<< previous topic next topic >>
There are four types of tax that you or your estate may be subject to:
- Income tax: You
have to let the Inland Revenue know that you're
receiving income from a property because you'll
probably have to pay tax on it. This tax is
applied to the profit generated from the renting
out of the property. It has to be paid every
year in half-¬yearly installments on 31
January and 31 July. Taxable profit is deemed
to be taxable rental income minus allowable
expenditure. IR150 gives you lot’s of
info on what can be set off against the income.
For example you can offset the cost of things
like interest payments, repairs, insurance and
management fees to keep your tax bill to a minimum.
And if you've furnished your property, you're
allowed a deduction for wear and tear on furnishings
and equipment.
- Capital Gains Tax: This
tax is only applied once the property has been
sold. It is essentially the tax applied to the
profit you have made from selling the property.
Consider buying the property in joint names
as when you come to sell the property you will
have two lot’s of Capital Gains Tax Allowances
to set against any profit made. It is possible
to put a property you already own into the joint
names of you and your spouse. Transfers to a
non-spouse may trigger CGT to be paid.
- Stamp Duty Land Tax: This is a tax payable on land transactions,
starting at 1 % for properties over £125,000
and rising to 4%. Payable by you on the purchase
of the property.
- Inheritance Tax: When you die your estate may be subject to inheritance tax if the property takes your total estate over currently £275,000 then moving to £285,000 in 2006-2007 and finally £300,000 in 2007-2008. A well written will can really help reduce the potential tax you may pay.
If you're buying-to-let, you've got to think about tax. The Inland Revenue produces a guide to what you need to know, called 'IR150: Taxation of Rents: A Guide to Property Income', that you can download from our website (it’s a bit weighty but if you like detail..) or you can order from your nearest tax office.