Investment Property Accountants - WARR & CO

Investment Property Accountants

Comparing The Options Available to Undertake Property Investment

We have undertaken to cover both the Limited Company and Pension options in some detail in the respective articles which may be read by clicking on the links above.

Having outlined in some detail the advantages and disadvantages of different mechanisms of undertaking property investment, we have taken the opportunity of summarising in table form the salient points. Clearly this should not be utilised in isolation to make a final decision, but rather as a useful tool when discussing the options with a qualified tax specialist such as ourselves.

 

Personal

Limited Company SIPP or SSAS

Allowable property type

Any

Any Commercial only

Buy to let - rental profit

Income Tax

Corporation Tax Tax Free

Rate of tax

20% or 40%

21% or 29.75% 0%
Buy to let - capital growth
Capital Gains Tax (CGT)
Corporation Tax Tax Free
Rate of tax
18%
21% or 29.75% 0%
Exemptions

£9,600

per annum per person

Nil Nil
Trading profit
Income Tax
Corporation Tax Tax Free
Rate of tax 20% or 40% 21% or 29.75% 0%
Source of borrowing Buy to lets or commercial Buy to lets or commercial Commercial
Borrowing potential

Buy to lets - 85%

Commercial - 75%

Buy to lets - 85%

Commercial - 75%

50% of net scheme assets less existing borrowing

 

 

 

Advantages

No restriction on investment properties

Limited liability

Limited liability

More cost effective funding options No restriction on investment properties Tax free property returns - within pension

Can access funds at any time

Dividends can assist in reducing personal tax 25% of proceeds can be enjoyed as tax free cash
Annual CGT exemptions Can access funds at any time

Exempt from IHT prior to retirement

  Control over personal income and as such tax  

 

 

Disadvantages

No control over personal tax on ongoing profits

Limited funding options

Restriction on investment properties

Investments will fall into estate for IHT purposes

Less cost effective funding options No access to funds until minimum age 55

Unlimited liability

Accounting costs and requirements

Limited funding options

   

Income taxable once drawn in retirement

It is fair to say that there is no default option when it comes to property investment, as each will be appropriate to the individual circumstances and likely investment activity of the property investor. We would welcome the opportunity of discussing your specific needs and requirements and advising you accordingly. Please feel free to contact Peter Edwards or Tim Warr in this regard.

Date of Article: 3rd December 2008

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This domain is owned by Warr & Co Chartered Accountants which is a member of the Institute of Chartered Accountants in England & Wales (ICAEW). Whilst the information detailed here is updated regularly to ensure it remains factually correct, it does not in any way constitute specific advice and no responsibility shall be accepted for any actions taken directly as a consequence of reading it. If you would like to discuss any of the points raised and / or engage our services in providing advice specific to your personal circumstances, please feel free to contact Peter Edwards on 0161 477 6789 or email us at info@warr.co.uk

 

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