Gepp Solicitors - Solicitors in Chelmsford, Essex

Property has long been an important investment for a lot of people whether it is the family home, holiday home, a single let property or a portfolio of let properties.

The value of property can make up a significant portion of someone’s wealth, and income in some circumstances.

The main taxes that are relevant to property are:

  • Stamp duty land tax (SDLT) on purchase,
  • Capital gains tax (CGT) on disposal,
  • Income tax (IT) on rental properties,
  • Inheritance tax (IHT) on the value at death.

All of these add to the tax burden for owners of property.

SDLT is payable on the chargeable consideration paid for a property/land or part of a property/land. Chargeable consideration doesn’t just mean the money that exchanges hands on a purchase. It can be the assumption of debt on a gifted property, if there is a mortgage attached. Most people check the SDLT when they buy a property, but care needs to be taken when being gifted a property or purchasing at an undervalue as SDLT may still apply.

When a property, or other asset, is disposed of there is a potential CGT liability to consider. Just because no sale proceeds are changing hands, it doesn’t mean that there isn’t a tax liability. This means that it is very important to check if a liability arises before any transaction takes place. It may be possible to mitigate a tax liability and early planning is recommended.

Disposal of residential property may also need to be disclosed to HMRC within 60 days of completion, with the tax paid by the same deadline.

IT paid on rent received can be reduced by utilising spouses lower rate bands. Tax relief can also be received in full for mortgage interest payments, which may not be the case for higher or additional rate taxpayers.

Property values have increased dramatically over the last few years, and this can lead to an increase in IHT payable on death. It is possible to plan to give away property and, in some cases, retain the rental income.

The key, as with any planning, is to look at what you would like to achieve early.

Understanding the options available is the first step in successful tax planning.

For more information or advice

Contact Marc Dorsett on:
Call: 01245 228146 or
email: dorsettm@gepp.co.uk

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Call: 01245 228146 or email: dorsettm@gepp.co.uk or request a call back.

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Your Capital Taxes On Property Team

Kayleigh Barton

Trust Administration Assistant

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Marc Dorsett

Tax Partner

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Sarah Field

Trust and Estate Assistant

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