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Tips To Help Landlords With Tax Savings

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Tax Savings

If you want to be a successful landlord, there are a lot of things to consider, but one thing that’s often overlooked is tax saving. It’s not as glamorous as finding your dream property, but it can make all the difference to your cash flow. That’s why we thought we’d share some tips for landlords on our blog to help you save money on your property tax in London. With these tips, you’ll be able to reduce your taxes as a landlord and get your business in a better place for next year’s tax return.

Set up a limited company

Setting up a limited company may require a good deal of planning, but it’s a great way to lower your property tax bills as a landlord. You’ll be able to purchase property through a limited company, and you’ll have the option to employ yourself or another person to manage the properties you hold in the company. This landlord tax saving strategy isn’t for everyone. But if you find it works for you, the savings can be substantial. Talk to your accountant to see if you can use a limited company to transfer your properties.

Extend to mitigate tax expenditure

By investing in your existing properties, you’ll avoid paying high stamp duty rates and you’ll also see your portfolio value increase while you’re at it. With the recent changes to development rights, you’re now able to expand your existing property even further than you could before. This means you’ll see an increase in your monthly income. If you factor in the cap price of your rental area, you can make real money by extending or growing your property. Keep in mind that if you’re making big improvements that could increase your occupancy, you could be impacted by the upcoming HMO rules changes.

Explore all tax bands

If you want to lower your taxes as a landlord, you could try transferring your property to your partner. You won’t need to pay any capital gains tax since it’s usually not paid when you move between spouses. Plus, you could use their lower tax bracket to your advantage. You could also save money on your rent if they have a lower tax bracket than you do. And if the property you’re transferring doesn’t have a mortgage and you’re not making any money from it, you won’t have to pay stamp duty either.

Ensure you get the most from your property

Getting your rental property reassessed might seem like a no-brainer, but you’d be surprised how much money landlords are missing out on every year. Getting your property revalued can have a big impact on not only how much it’s worth, but also how your business is seen by the outside world. Having a more accurate idea of how much your property is worth will give you a better chance of getting your loan to value reassessed. If your rental property price goes up, you’ll probably see your loan to value go down, which could give you more options and a lower interest rate for buying-to-let. 

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