Top tax tips for buy-to-let landlords

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When buying a buy-to-let property think about:

If you are married or in a Civil Partnership, consider whether the purchase should be in joint names – there may be advantages.

For example, if the purchasing person is a higher rate taxpayer and his/her spouse doesn’t work, it may be better to buy in the spouse’s name. That way you can use all available tax-free allowances and basic rate bands for the rental income. It can be transferred back to joint names before sale to take advantage of two lots of capital gains tax exemptions.

If you are taking a buy to let mortgage, consider putting the minimum deposit down and keeping the loan high. The interest on the loan is tax deductible.

When selling you might consider:

If you are married or in a Civil Partnership why not transfer half the title to your spouse to take advantage of their Capital Gains Tax exemption (currently £10,600).

If the buy-to-let property is your principal private residence for even as little as a month then the last three years of ownership are tax free.

If there are losses in your shares portfolio these can be realised to reduce the gain on the property.

If you are you selling towards the end of the tax year, delay concluding missives until after April 5. This will give you an extra year to pay the tax due.

One thing to bear in mind if you are thinking about gifting a property that is not the recipient’s principal private residence (PPR) is that it is deemed as a disposal at market value at the date of the gift and is liable for tax. A lot of people think that because there is no money changing hands it is exempt.

However, there are ways to minimise the tax or even reduce this to nil if it is diverted through a trust, which, of course, we can help with.

If you would like to discuss any of the issues raised in this article please contact Stephanie Dodds, Personal Tax Manager on 0131 656 5702 or stephaniedodds@lindsays.co.uk