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Property Tax Insider

Try Property Tax Insider today and receive:

  • 3 FREE Issues - The current May #105 and the previous two issues of April #104 and March #103 (12 tax saving articles)
  • Delivered to your doorstep
    Here are the 12 strategies our tax experts are sharing with you as part of your free trial:
    • Private residence relief - what's a 'safe' period? 
    • A change in personal circumstances can have tax implications, such as affecting the availability of capital gains tax principal private residence (PPR) relief. For example, a house might be occupied for only a short time before the sale, due to a change of plans following a relationship breakdown.

      Mark McLaughlin highlights an important factor in the availability of capital gains tax principal private residence relief on the disposal of a dwelling.
    • Making tax digital for landlords – be ready!
    • At the time of writing, the Chancellor’s spring statement 2019 advised that, while making tax digital (MTD) for VAT was going ahead, we would see no further developments until after 2020 at the earliest.

      Lee Sharpe looks at making tax digital and the key issues for landlords.
    • What’s it worth? Valuing shares in property investment companies
    • Valuing shares which are quoted on the stock exchange or alternative investment market is easy, as these shares are bought and sold and are quoted at a publicly available price. Private companies which aren’t so traded, however, present huge problems of valuation; which is a pity because the tax system very often requires us to value them for various purposes.

      Alan Pink looks at the theory and the practice of share valuations in respect of investment companies – and how far apart these can be.
    • From bad to worse: Further reduction in interest relief for landlords
    • The system for giving relief for mortgage interest and other finance costs incurred by residential landlords is gradually shifting from one where relief is given as a deduction in computing the taxable profits of the property rental business to one where the relief is given as a basic rate reduction.

      Sarah Bradford reminds us that residential landlords’ tax relief for interest and finance costs is further reduced in 2019/20.
    • Transferring rental income: Be careful!
    • Is it possible to give away your income in a property but still retain the capital? Is it possible to transfer some or all of the rental income to another family member – for instance, one who is subject to a lower rate of income tax?

      Lee Sharpe looks at how rental income can be shared out - and points out some traps to be aware of.
    • Minimising your tax on ‘HMO’ conversions
    • HMO stands for house in multiple occupation. We’ve always had these in the UK, but they seem to be a very topical subject at the moment, no doubt due to our chronic housing shortage. 

      Alan Pink looks at a case study involving the landlord of houses in multiple occupation.
    • Cash basis: Relief for capital expenditure
    • The cash basis is a simplified basis of assessment that allows landlords to compute profits by reference to money in and money out, removing the need to match income and expenditure to the period to which it relates, as is necessary under the traditional accruals basis. 

      Sarah Bradford explains how capital expenditure is relieved where landlords prepare accounts using the cash basis.
    • Property tax deductions: Don’t miss out!
    • Capital gains tax (CGT) relief is generally available on the disposal of property in respect of improvements, etc., for ‘the amount of any expenditure wholly and exclusively incurred on the asset by him or on his behalf for the purpose of enhancing the value of the assets, being expenditure reflected in the state or nature of the asset at the time of the disposal’ (TCGA 1992, s 38(1)(b)).

      Mark McLaughlin points out that transactions should be structured correctly to avoid the risk of adverse tax consequences.
    • Passing on the family property company shares 
    • Surprising though this may sound coming from a tax adviser, there’s more to life than tax, and one of the first things that need to be said, in the context of someone planning to give away shares in the family property investment company to other family members, is that you need to think about the consequences of this in the non-tax sphere, as well as in the tax sphere. 

      Alan Pink highlights some planning points and pitfalls when shares in a property investment company are transferred between family members. 
    • Private residence relief: Don’t delay! 
    • Most homeowners will be aware that if they buy a house and live in it as their only or main residence throughout their period of ownership, there should be no capital gains tax (CGT) to pay when they sell the property, due to principal private residence (PPR) relief. 

      Mark McLaughlin highlights a potential restriction in capital gains tax private residence relief in common circumstances.
    • Selling land and gardens separately: Does the order matter?  
    • Private residence relief acts to exempt any gain arising on the sale of the ‘dwelling house’ from capital gains tax where the dwelling-house has been the taxpayer’s only or main residence throughout the period of ownership.  

      Sarah Bradford explains that when part of the garden is sold separately from the house the order in which they are sold matters. 
    • Coming soon: Private residence relief restrictions 
    • The vast majority of readers will know that selling one’s home is tax-free. The capital gains tax (CGT) legislation to give effect to this is commonly referred to as ‘principal private residence (PPR) relief’ and starts at TCGA 1992, s 222.

      Lee Sharpe looks at forthcoming proposed changes to capital gains tax private residence relief for homeowners as announced in Budget 2018.

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