How long do you intend to hold onto your investment property?  If you intend to sell at some point, holding property in your own name is usually the most tax-efficient option.  But, if you intend to hold for the very long term, or even until death, then a property investment company may be a better option.

Are you:

• Likely to be increasing your property portfolio size?
• Unlikely to be selling the properties on a piecemeal basis?
• Mainly financing property purchases from your own funds (or with low LTV mortgages)?

Profits up to £300k are currently taxed at 21%, meaning where profits are retained the income is taxed at around half the equivalent income tax bills, so there are more funds available to buy further properties.

The property investment company can also be used as a retirement fund. Typically, with mortgages repaid, there will be a strong income stream, which can be paid out to the shareholders as tax-efficient dividends.

Eventually, the company itself can be sold, and buyers will only need to pay 0.5% stamp duty (much lower than direct property investment).  The company can also be passed on to the next generation which allows the income paid out to be carefully controlled.

Contact Stephen Fay ACA at Fylde Tax Accountants for specialist advice on all aspects of property tax:

Tel: 01253 350 123
Email: stephenfay@fyldetaxaccountants.co.uk