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Incorporation

For many years, our new client has owned five residential properties with interest-only mortgages. He was frustrated with the higher rate tax on his property income and sought advice as to whether incorporation was a good idea.

How we helped our client
Our client’s portfolio was worth £1.2m and had been bought for only £450k 20 years earlier. The new interest rules were likely to cost our client around £5,000 more income tax per annum.

We calculated that the capital gains tax and land and buildings transactions tax (LBTT) costs to incorporate would represent a payback period of over 20 years and therefore advised our client that doing nothing was the better option. He also borrowed on very favourable terms and making no changes preserved those terms.

We set up a company for our client’s future property investments and have successfully been able to assist with planning to reduce his income tax exposure on the property.

For more information or to discuss further, please contact the Residential Property Taxperts.

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