property investment and tax

[JMorley]

I think the most tax efficient way would to have put our main residence in either my name or my wife's name and the second property in the other's. That way you can claim it to be a main residence and not pay tax on any profits on final sale. It is of course a tax dodge and I have not pursued this for that reason, although I know of people who have very succesfully.

With respect to paying less tax if I held it in my name rather than the company, I would be taxed at 40% income tax.

As it stands I put 12.5k into the property on purchase, a further 10k on repairs. This would have to have been paid to me in dividend as 22.5k and would have incurred 40% (at least in part). When I sell, while this money would not be taxable a second time, assuming I sell for a reasonable profit of ~25k then unless I am out of contract for a period prior to selling this too will be taxed at 40%. So no real gains for me.

So purchasing through the company has enabled me to use marginal relief on profit not paid as dividend and any other capital at 19% CT. Obviously, at the point of sale I pay dividend and will incur 40% tax. However, I have more cash to put into the property on purchase as I pay less tax at this point. Additionally, loan interest, solicitor's fees etc. go against CT.

[simondolan]

As for accountants wanting to avoid enquiries because of having to do the work free, I think you will find that most (if not all) accountants would charge for enquiry work or insist/advise you to get insurance to cover their costs - even for those who do the "all inclusive" monthly fee, I think very few would also include tax enquiry/investigation work - they will either be charged separately or your monthly fee will include insurance - whatever way, the accountant will get paid for the extra work!

Exactly - tax advisers and accountants would actually have a vested interest in putting forward contentious claims to the Revenue - it equals more fees when the enquiry comes. What any good accountant will avoid is putting forward claims that we know from experience will fail.

[JMorley]

Simon

I do thank you for your input to this discussion, I may be mistaken but your last post sounds like you have taken offence. None was intended.

Regards

[ASB]

I think the most tax efficient way would to have put our main residence in either my name or my wife's name and the second property in the other's. That way you can claim it to be a main residence and not pay tax on any profits on final sale.

Only in limited circumstances. A non seperated couple can't normally get away with 2 main residences between them.

[JMorley]

They should not, but that does not stop many people. I've seen it done (obviously should the Revenue ask me to testify to this I only said this for effect!).

[ASB]

They should not, but that does not stop many people. I've seen it done (obviously should the Revenue ask me to testify to this I only said this for effect!).

It's common as you say. A friend who sold his London flat put it down as the sale of his main residence on his tax return. He got picked for an aspect enquiry and it didn't even get mentioned.

[JMorley]

Does make you wonder why you do things honestly sometimes, doesn't it.

[Spartacus]

Hello, e-currency service Exchange Paypal to e-gold, Moneybookers to e-gold exchange,Buy e-gold with StormPay,Buy e-gold with credit card - http://www.emoney-exchange.net

Milan, is this your plan B?