Property rental, sailing and tax (boatyish)

[ColdFusion]

Assuming my partner and myself (not married - yet) owned 3 properties that produced in the region of £14,500 gross annual rent, what would be the best way of:

1) owning the properties (i.e. own one each + one joint; all three joint; under the umbrella of a company; etc) to minimise future capital gains tax?

2) minimising our income tax liability in order to maximise income for a longish sailing sabatical (say, 3+ years) to the med and beyond?

Bill and Nat


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[jhr]

Personally I think this is a case where you should get some proper professional advice, even if it means paying for it /forums/images/icons/frown.gif - getting it wrong could literally cost you tens of thousands.

Having said that, I'd say that you should each own one of the houses, and share the third, both from an income and Capital Gains tax angle. However, be mindful that if one of you then dies, and you're not married, there would be an Inheritance Tax issue. One more reason why you really need expert advice...............

<hr width=100% size=1>Je suis Marxiste - tendance Groucho

 

[bedouin]

If you are intending to cruise for a few years (i.e. not be resident in UK) then I would guess the most efficient method would be to set up an offshore company and own the properties through them. There is a good chance you could get away with paying very little tax during the cruise. It may be advisable to treat one property differently (i.e. your main residence which has different rules for e.g. capital gains tax)

You definitely need professional advice for this - possibly from an offshore (CI) advisor.

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[Twister_Ken]

Whatever you do, Wee Gordy Broon will want his shilling!

<hr width=100% size=1><A target="_blank" HREF=http://www.writeforweb.com/twister1>Let's Twist Again</A>

 

[Joe_Cole]

Not enough information. You really do need expert advice for this one!

Joe

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[DavidofMersea]

As others have said you need professional advice.

If I may give some practical advice (property letting is my business) you don't seem to have considered the management. If you are going to be away, commercial letting would be much better than houses.

It would be best from a practical position to own all three properties jointly, that way if one or two properties are empty, the loss is shared.

If you would like some more advice, write to me directly

David of West Mersea

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[BrendanChandler]

You probably need offshore advice.

I would have thought that owning the properties jointly would save your Capital Gains Tax.

You only pay CGT when you sell the property and hopefully you would spread the sales.
If you sell property A this year, you would each have a CGT allowance of about £7.5K ie £15k before there is any question of paying tax. There may also be allowances to offset against the gain.

If each property is owned by an individual, CGT tax implications arise at a profit of £7.5k per annum.

Brendan

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http://hometown.aol.co.uk/brendanchandler/index.html

 

[jonhenderson]

As a professional tax adviser, let me say this - get professional tax advice!

This is quite a complex area and should be approached with caution - there are many ifs and buts, especially when you start entering the murky world of residency.

Good luck!

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[nickpaulley]

a bit late but just read the post. It is complex so get advice. It would be difficult to transfer the properties into a company if already owned; think stamp duty and the possibilities of a capital gains tax charge on the transfer into the company even if you are not getting cash out. Even if you go non resident because you are floating around the planet for some 3 years the income is taxable in uk less your personal tax free allowances. The income tax on 14.5K income is maybe £600 or so.

You will also need to consider whether you need to contribute to the NIC pot while you are away.

Still there you go. take professional advice.

Cheers
Nick

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