It’s been pretty bad news over the last couple of years if you have a residential buy to let portfolio, with measures such as:
The removal of higher rate tax relief on mortgage interest;
Higher stamp duty costs for additional properties;
The loss of the wear and tear allowance.
Many people have considered moving their portfolio into a corporate structure to save some of these extra costs. The problem has been that they tend to crystallise any capital gains tax when they are transferred in. In addition stamp duty is normally payable.
But by using reliefs that are available it is possible to transfer your portfolio into a corporate structure without the capital gains tax or stamp duty problem.
Once in the corporate structure the following benefits can be enjoyed
- Mortgage relief is available in full
- The base cost for the company on transfer is the current market value
- A 17% corporation tax rate
- No higher rate tax on profits reinvested
- 17% capital gains tax on subsequent gains
- Indexation relief for capital gains
- Options to split income between family members in various proportions
There are quite a few conditions to comply with in order to qualify for the relief and so we advise that specialist tax advice is taken. We are able to give a free initial indication as to whether you might be eligible.