{"id":3070,"date":"2016-11-11T13:27:41","date_gmt":"2016-11-11T13:27:41","guid":{"rendered":"https:\/\/dev.withcreative.co.uk\/lforl\/?p=3070"},"modified":"2016-11-11T13:27:41","modified_gmt":"2016-11-11T13:27:41","slug":"tax-loophole-landlords-preparing-exploit","status":"publish","type":"post","link":"https:\/\/dev.withcreative.co.uk\/lforl\/tax-loophole-landlords-preparing-exploit\/","title":{"rendered":"The tax loophole landlords are preparing to exploit"},"content":{"rendered":"

\"Tax<\/a><\/h4>\n

2017 reforms look set to leave landlords worse off. But, as we edge ever-closer to January, many believe they\u2019ve spotted a tax loophole that could turn the tide back in their favour. Is the second-homeowner party set to continue?<\/h4>\n

When George Osbourne announced buy-to-let tax relief reforms back in July, his intentions were clear:<\/p>\n

Buy-to-lets were to be curtailed. First-time buyers were to be handed an ace. Owning a second home might not be so profitable from 2017.<\/p>\n

But when drafting the reforms, the then-chancellor of the exchequer overlooked a crucial detail.<\/p>\n

And, as an increasing number of landlords are now discovering, it was a detail that threatens to thwart the treasury\u2019s intentions…<\/p>\n

Landlords better off as limited companies<\/h2>\n

As things stand, landlords can claim tax relief on any mortgage interest they pay.<\/p>\n

But from January, tax relief will be capped<\/a>. Landlords who pay higher rate tax will be left a great deal worse off \u2013 some basic rate taxpayers will even take a hit.<\/p>\n

But no such legislation applies to limited companies, effectively creating a tax loophole. By selling properties to companies they own, landlords can avoid paying tax on interest payments entirely.<\/p>\n

They can avoid tax on property maintenance and letting agency fees, too. In fact, if it\u2019s a reasonable expense, limited companies simply aren\u2019t liable for taxation. And by exploiting the tax loophole, landlords could be better off than under current legislation.<\/p>\n

So it\u2019s easy to see why so many landlords are taking advantage. Perhaps the real question is simply: why aren\u2019t there more of them in on the act?<\/p>\n

The costs of selling a property to yourself<\/h2>\n

The answer most likely lies in the potential costs. Depending on circumstance, exploiting the tax loophole could come at considerable expense.<\/p>\n

Selling a property that\u2019s increased in value triggers a capital gains tax \u2013 a tax that\u2019s more than likely to apply in the majority of cases.<\/p>\n

There\u2019s buy-to-let stamp duty<\/a>; there could be early mortgage repayment charges; legal fees; valuation fees; remortgaging fees; the list goes on.<\/p>\n

All of that for a simple tax loophole. Is it really worth it? Just how much might a landlord gain?<\/p>\n

Buying through companies jumps 40%<\/h2>\n

Well, the savviest of landlords have already run the numbers.<\/p>\n

And in many cases, they\u2019ve decided exploiting the tax loophole leaves them better off.<\/p>\n

Brightstar Financial spokespeople reckon the number of landlords buying property through limited companies has jumped by 40 per cent in the past 12 months.<\/p>\n

Mortgages for Business has recently seen buy-to-let applications shoot up 33 percentage points \u2013 despite the imminent \u2018detrimental\u2019 reform.<\/p>\n

So whilst the tax loophole won\u2019t be the way to go for all, we\u2019d recommend landlords begin seeking professional advice<\/a>.<\/p>\n

Given the trend, many landlords clearly believe they have something to gain.<\/p>\n

Who\u2019s to say the same sums don\u2019t apply to you too?<\/p>\n","protected":false},"excerpt":{"rendered":"

2017 reforms look set to leave landlords worse off. But, as we edge ever-closer to January, many believe they\u2019ve spotted a tax loophole that could turn the tide back in their favour. Is the second-homeowner party set to continue? When George Osbourne announced buy-to-let tax relief reforms back in July, his intentions were clear: Buy-to-lets […]<\/p>\n","protected":false},"author":2,"featured_media":11204,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[],"yoast_head":"\nThe tax loophole landlords are preparing to exploit<\/title>\n<meta name=\"description\" content=\"More and more landlords are set to exploit a tax loophole that might leave them better off. 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