Johnson
Posts:17
 |
| 29 Sep 2006 05:55:19 |
 Alert
|
| I've been told that if I move my rented properties into a limited company I would avoid inheitance tax. If thats right why doesn't every landlord do it? |
|
|
|
|
Paul Mac
Posts:21
|
| 29 Sep 2006 06:12:11 |
Alert
|
| Quite simple really, the advice is wrong landlords can't avoid inheritance tax by putting their properties in to a Ltd Co. |
|
|
|
|
b1gman
Posts:9
|
| 02 Oct 2006 10:59:52 |
Alert
|
Inheritance tax is easy to plan for. It really is a voluntary tax. There are lots of ways to get around it.
However the real killer is CAPITAL GAINS TAX. You cannot avoid this.
For example you can give your property away to your children to avoid IHT (as long as you live a few years afterwards), but as soon as you give the property away, (or sell it), then capital gains tax becomes due. It's a F****G nightmare.
Best thing to do is leave the country for 5 years (But choose a country to move to that has a favourable tax regime, otherwise you could be worse off).
|
|
|
|
|
gerryh99
Posts:1
|
| 02 Oct 2006 18:24:38 |
Alert
|
| Hi. My understanding is that it is better, for all sorts of reasons, to own investment property through a limited company, but you cannot 'give' it to the Co. You have to sell the property to the Co, then incurring CGT on the sale. |
|
|
|
|
Paul Mac
Posts:21
|
| 02 Oct 2006 18:55:26 |
Alert
|
[quote]Posted By gerryh99 on 02 Oct 2006 18:24:38
Hi. My understanding is that it is better, for all sorts of reasons, to own investment property through a limited company, but you cannot 'give' it to the Co. You have to sell the property to the Co, then incurring CGT on the sale.[/quote]
There's no point doing this to save Inheritance Tax though, you'll still have to pay IHT at the same rate. So potentially you may have paid CGT and IHT on the same investment - I can't see the advantage of doing that.
There may be advantages of trading as a limited company, the ability to defer personal taxation for example, but the net effect on IHT as a landlord will be nil. |
|
|
|
|
alibroad
Posts:2
|
| 04 Oct 2006 18:24:20 |
Alert
|
| I recently attended a seminar where the speaker advised the best way to avoid CGT is quite simply don't sell. Refinance your properies instead. Your CGT allowance is around £8000 and is based on the difference between buying and selling price. Whereas your IHT allowance is £285k and is based on the net amount after debts/mortgage have been paid. You have the benefit of the funds raised through refinancing and you also limit the IHT liability for your beneficiaries by having a bigger mortgage to pay off. Needless to say, the speaker was a mortgage broker! Anyone agree with his comments? |
|
|
|
|
Paul Mac
Posts:21
|
| 05 Oct 2006 08:42:00 |
Alert
|
| Alibroad, to answer your question, I don't agree. Simply raising the mortgage may release cash but you'll pay interest. It could be quite complicated as well, say you remortgage and get £100,000 cash - that's still liable for IHT until you spend it. If you give the cash away then there's the 7 year rule. Without knowing the details of what the adviser said I can't comment too much but I'd be surprised if simply remortgaging was an effective way of getting rid of IHT, I just can't see how it would help. |
|
|
|
|
SoozyM
Posts:1
|
| 09 Oct 2007 06:04:37 |
Alert
|
| This is not entirely true - this method will not avoid CGT, it will just DEFER it. You can continue to refinance the property for as long as you are financially able to support it, but at some point your mortgage re-payments will outweigh the rent you can achieve. At some point presumably you will look to sell the property - at that point the CGT you will be hit with will be enormous as it will relate back to your original purchase price. |
|
|
|
|