How can I pay less tax in property?
If you are asking the question, ‘How can I pay less tax in property?’ you’re probably already a successful property investor. Are you just starting out on your property business adventure? You don’t need to be worrying too much about nitty gritty details like tax reduction. In fact, it’s possible that you won’t even need to pay tax if you’re just starting out. There’s a limit on that though. Afterwards there’s a sliding scale but please check with a tax accountant for official information. Regardless, if you are at the beginning of your property journey, you can skip this question and just watch the rest of the video.
It’s Sunday, you know what that means? It’s time for some Q&A. On this week’s episode, you’ll discover how to estimate HMO costs, tips on searching for finished or unfurnished apartments and much, much more. This is a really juicy, treasure chest video with great information which you can apply to your business.
Another topic which is discussed is about lowering the amount of tax you pay. According to our property expert, Samuel Leeds, you need to think of tax as a profit reduction exercise. In order to decrease your profit figure, you need to think about which expenses can be paid for by your business. Every time you buy something expensive, ask yourself whether it is tax deductible. Even when you go on courses, for example. When you stay in a hotel or go for dinner, those things are likely to be tax deductible because they are contributing to your business.
Samuel buys his properties through a limited company because it means the interest payments on the mortgage will be tax deductible. However, if you purchased that same property as an individual, the interest payments would not reduce your tax bill and you wouldn’t get that money back. Similarly, stamp duty tax can be saved if the property is owned by a company and you purchase the company instead of the property. Doing this will shrink the stamp duty down to almost nothing.
Watch the rest of the video for more information and other property tips!