As an accountancy firm specialisng in property tax, we started from the ground up, we understand your unique challenges and opportunities. Regarding property tax, our goal is to help you maximise your savings and investments. With the right advice, you can navigate the intricacies of property tax and ensure you are making the most of your assets.
Understanding property tax
Property tax can be complex, but you can simplify the process with our guidance. It encompasses various taxes, including council tax, business rates, and taxes related to buying, selling, and owning property. For business owners, understanding these taxes is crucial to minimise tax liability and maximise returns.
Capital gains tax: What you need to know
Capital gains tax (CGT) applies when you sell an asset, such as property, and make a profit. Your pay rate depends on your total taxable income and the gain size. For higher-rate taxpayers, the CGT rate on property is 28%, while for basic-rate taxpayers, it’s 18%.
To reduce your CGT liability, consider the following tips:
- Utilise your annual exemption: Each individual has an annual CGT allowance (£3,000 for the 2024/25 tax year). Ensure you use this allowance to its fullest.
- Offset losses: If you have made losses on other assets, you can offset these against your gains to reduce your taxable profit.
- Plan ahead: Consider the timing of your property sale. Spreading the sale over two tax years can help you utilise more than one year’s CGT allowance.
Mortgage interest relief: Changes to be aware of
For property investors, mortgage interest relief has undergone significant changes. Previously, you could deduct mortgage interest from your rental income before calculating your tax liability. Now, a tax credit at the basic rate of 20% is available instead.
This change has increased the tax burden for many landlords, particularly higher and additional rate taxpayers. To mitigate this impact, consider the following strategies:
- Incorporate your property business: By setting up a limited company, you can benefit from corporation tax rates (19%) instead of higher personal tax rates.
- Review your financing: Look for better mortgage deals or consider repaying some of your mortgage to reduce interest costs.
Benefits of using a tax accountant for property tax advice
Working with a tax accountant can provide numerous advantages. Here are some ways we can help:
- Expert advice: We stay updated on the latest tax laws and regulations, ensuring you receive accurate and timely advice.
- Maximise deductions: We help you identify all possible deductions and reliefs, reducing your tax liability.
- Save time: Managing property tax can be time-consuming. Let us handle the paperwork, so you can focus on your business.
Business rates: Are you paying too much?
Business rates are a significant expense for many businesses. Ensuring you are not overpaying is crucial. Here are some steps to take:
- Check your rateable value: Your business rates are based on your property’s value. Ensure this value is accurate. If you believe it’s too high, consider appealing.
- Apply for reliefs: Various reliefs are available, including small business rate relief and rural rate relief. Make sure you are claiming all applicable reliefs.
- Stay informed: Business rates can change. Keep up-to-date with any changes that may affect your liability.
Rental income: Property tax tips for landlords
If you receive rental income as a landlord, it’s essential to understand your tax obligations. Here are some tips to help you manage your rental income effectively:
- Keep detailed records: Maintain accurate records of all income and expenses related to your rental property. This will help you claim all allowable expenses and reduce your tax bill.
- Claim allowable expenses: Expenses such as repairs, maintenance, and letting agent fees can be deducted from your rental income. Make sure you claim all eligible expenses.
- Consider joint ownership: If you own property with a spouse or civil partner, you can share the rental income. This can be particularly beneficial if one partner is in a lower tax bracket.
Planning for the future
Property tax is not just about the present; it’s also about planning for the future. Whether expanding your property portfolio or considering selling, a long-term tax strategy is essential.
Diamond Accounts recommends regular reviews of your property investments and property tax situation. This ensures you remain compliant with tax laws and take advantage of any new opportunities or reliefs that may arise.
Summing up
Property tax can be daunting, but with the right advice and planning, you can turn it into an opportunity to save money and invest wisely. Our accounting firm is dedicated to providing you with the best property tax advice tailored to your specific needs. Whether you need help with capital gains tax, mortgage interest relief, or managing rental income, we are here to assist you every step of the way.
Don’t miss out on maximising your savings and investments—get in touch with us today for expert property tax advice.