There are many factors that get overlooked when understanding how landlords can navigate themselves. How can a landlord have tax efficiency?
Firstly, we must look at how to create tax efficiency and what would be a landlord’s options?
- Tax bands not being taken advantage of. Capital Gains Tax is usually not paid when assets are transferred between spouses This would essentially allow you to cut your tax liability by simply just transferring your assets to your partner.
- Have you considered creating a limited company? This requires planning though there are many benefits. Not only having a limited company can help to reduce taxes as an existing landlord, it also allows you to buy a property through you’re new business, this means that you’ll become enabled to offset costs against profits; as well as being able to employ yourself, or someone else, to manage the property that’ll be held within your portfolio. The money that’s been proven to be saved is substantial, this idea should be greatly considered.
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- If you’re in a position to make full use of a Limited Liability Partnership as a professional property business, then you would be able to enjoy favourable tax laws on the treatment of capital and income.
While flexibility is extremely important when looking at being a landlord, it’s vital that you find the most suitable dynamic between your property and your taxes.
It’s important to assess what area you’re looking to achieve flexibility as a landlord when discussing what dynamic is most suitable to you. Is it in your relationship with your tenant? Is it in creating a relaxing life for yourself and decreasing your workload?
- If you’re looking to be flexible with your tenant then it’s important to focus on communication and boundaries in relation to the property, to ensure you’re both kept in the loop, helping to limit surprises.
- If you’re looking to be flexible in terms of creating a more relaxing and enjoyable life for yourself as a landlord, then it is advisable that you to either invest in a property manager, or focus on creating an efficient contract between the two of you at the beginning of the tenancy, so there’ll be less needs for constant meetings between you as the agreements are already clearly laid out.
It’s important to note that the higher your tax efficiency is, the more likely it is to impose on your own flexibility – however this is easily solvable. To avoid this dilemma you must aim to employ people who can offer you professional help, or work within the framework of your existing lifestyle.
Please contact Pelin Martin to book a 30-minute complimentary property consultation on +0208 994 7327 – pm@bluecrystallondon.co.uk