Recent changes in income tax reliefs and SDLT (stamp duty) has forced many property portfolio investors to review their investment structures. My colleague David Gibbs covers these considerations in his blog [read more].
As a result I have seen an increase in the desire to incorporate (which means moving the properties into a limited company) as a means to access lower tax rates and benefit from a commercial structure. However, on the flip side there may be capital gains tax due on the transfer and SDLT considerations.
For a normal trading business these tax problems can be deferred as you move the business into the limited liability environment. I am currently working with a number of clients, advising them on utilising these business reliefs so that the properties can be moved into the limited company without immediate CGT and SDLT charges.
The added benefit is that using this tax planning technique can also help as a means to pass a share of your property portfolio to your children, both the capital value and the income.
Each situation is different and there is no one size fits all solution. Before making any decision I recommend you consider; how long you intend keeping the properties; what you are looking to do with the income from the property; what financial debt is linked to the property; what you wish to achieve longer term; succession planning for your property portfolio.
When working with clients I enjoy challenging situations which in turn task me to finding workable solutions utilising various methods of tax and commercial techniques.
If you would like to discuss your property portfolio please contact me for further advice.