At Kinherit we talk to lots of clients who have built up property rental portfolios as part of their investment and retirement planning strategy.
To assist these clients Kinherit provides access to regulated tax advice that focuses on two main areas:
Many landlords have seen their profits reduce significantly over the last few years.
This is partly because of the cost of dealing with increased regulation, but primarily because of the changes to how mortgage costs are treated for tax purposes.
Since the introduction of Section24 in 2017, landlords pay tax on their rental profits before getting relief for their mortgage costs, that relief being restricted to 20%.
What that means is that higher rate tax payers first pay tax at 40% or 45% on their rental profits and then claim 20% relief for mortgages costs.
While mortgage rates were low this was manageable, but many landlords have seen their low rate mortgage deals expire and replaced with much higher rate deals, which has resulted in some landlords now make a loss after tax.
As a reaction landlords have increased rents, but for many that has only made the issue worse, highlighting the need for landlords to take advice.
Many landlords are either looking to transfer properties to a limited company, where S24 has no effect, or are selling up and looking at how they can minimise their Capital Gains Tax.
Our Tax Partner can help you to understand your options so that you can take action to maximise the tax efficiency of your investment properties.
At some stage in your landlord journey you will start to think about Inheritance Tax and how it will affect your children’s inheritance.
Whether your rental properties are owned personally, in a partnership, or in a company, the value of those assets is subject to 40% Inheritance Tax on your death.
This is because rental properties are treated as investment and not trading assets, which means there is no relief available from IHT.
Creating a plan well in advance of your death is essential, as the most effective plans take 7 years before they are fully effective.
The Inheritance Tax legislation is complex and it takes skill and experience to create a plan that enables you to transfer value to your children, which is necessary to reduce Inheritance Tax, in accordance with the rules.
Our Tax Partner can help you to create your own plan. One that takes into account all of the requirements you have, such as:
How Kinherit can help
Whilst this is not something we can assist with in house, we do work closely with a trusted Chartered Tax Advisory firm who work on a fixed fee basis. Contact us today for an introduction.
Start your estate planning journey today with our expert guidance.