Property Tax Services
Property Tax Services for Property Developers, Landlords and Buy to Let Investors
Whether you’re new to property or have been doing it for a while, property tax can feel like a bit of a minefield. You want to ensure that your property portfolio is as tax efficient as possible, but you also recognise the need to comply with seemingly endless rules and regulations, which is why it’s important for property developers and landlords to work with an experienced property accountant.
At PW John & Co Accountants near Weston-super-Mare, we specialise in accounting for property and landlords. Our experienced team will work with you to minimise your property tax liabilities.
What is property tax?
Property tax includes taxes owed when buying, selling, letting or inheriting a property.
The table below outlines the key property taxes that property developers and landlords need to know about.
| STAGE OF PROPERTY INVESTMENT | TAX DUE |
| Buying | Stamp Duty Land Tax |
| Selling | Capital Gains Tax |
| Letting | Income Tax or Corporation Tax |
| Estate Planning | Inheritance Tax |
Who has to pay property tax?
Anyone who is buying, selling or inheriting a property may be liable for some sort of property tax.
Landlords and buy to let investors must also pay tax every year on any profit generated by their rental properties.
Taxes when letting property
Increased regulations, changes to stamp duty and decreasing tax relief have led many private landlords to consider becoming limited companies. This shift is mainly due to the different treatments in taxation. Instead of paying income tax as an individual tax payer, a limited company must pay corporation tax.
We will discuss what this means for your property tax liability in more detail below.
Personally owned rental properties
Tax on personally owned property is fairly straightforward. You will pay income tax on any rental profit at your normal rate.
From April 2020, landlords are no-longer able to deduct finance costs (including mortgage interest) from their rental income. Instead, tax relief on all residential property finance costs will be restricted to the basic rate of income tax. This means that higher additional rate tax payers will pay more tax on personally owned rental properties.
If you’re a lower rate tax payer, it’s probably more tax efficient for you to remain a private landlord.
Limited company owned rental properties
Tax on properties owned by a limited company is somewhat more flexible. Instead of paying income tax on rental profit, you will owe corporation tax.
The entire mortgage interest payment on a limited company owned rental property is tax allowable, so it will reduce your profit, thus reducing the amount of tax due.
Running a limited company isn’t for everyone, but if you’re a higher rate tax payer or own multiple rental properties it could significantly reduce your property tax bill.
Please get in touch via our contact page if you would like to discuss your options in more detail.
Taxes when buying property
Stamp Duty Land Tax is the tax that must be paid when purchasing property or land. Stamp Duty varies depending on whether you’re a first-time buyer, if you already own a property or if you are a non-UK resident.
When purchasing additional properties there is usually an additional surcharge to pay in Stamp Duty. This applies to both personally owned and limited company owned properties.
Taxes when selling property
When you sell a buy-to-let or rental property you may need to pay Capital Gains Tax on any gain (or profit). The gain is generally calculated by subtracting the sales price from the purchase price of the property.
There is a capital gains tax-free exemption which can be deducted from the gain, but tax will still be due on any remaining gain. This applies to both personally owned and limited company owned properties.
Our property tax services
Our property tax experts will provide proactive, forward looking accounting advice to ensure that your property portfolio is as tax efficient as possible, now and in the future. We can provide expert advice on issues including;
- The treatment of repairs versus capital expenditure
- Trading income versus Capital Gains consideration
- VAT consideration of property deals
- Making the most of the Principal Private Residence election
- Inheritance tax planning
We can also assist with;
- Preparation and submission of property tax returns along with supporting computations
- Property tax planning
- Compliance
Find out more
To discuss your requirements in more detail, you can call our team on 01934 412097, email or complete the form on our contact page and we’ll be in touch shortly.
Here are some more resources that you might find useful;
Tax relief for landlords explained
Accounting for property and landlords
Other accountancy services
We offer a comprehensive range of accountancy services for businesses and individual clients. Click the links below to find out more.
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