How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4428
Experience:  FCCA FCMA CGMA ACIS
75394688
Type Your Tax Question Here...
bigduckontax is online now

I own two properties, one is my main residence. The other I

Resolved Question:

I own two properties, one is my main residence. The other I am letting out. What is the best way of minimising my tax liability on the rental income?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to help you with your question. Routine maintenance can be set against rental income as can the interest element on any loan taken out on the property. Which has a very good summary of the sort of expenses which are allowable: 'Allowable expenses a landlord can claimThe most common types of expenses you can deduct are:water rates, council tax, gas and electricitymaintenance and repairs to the property (but not improvements)contents insuranceinterest on a mortgage to buy the propertycosts of services, including the wages of gardeners and cleaners (as part of the rental agreement)letting agents' feeslegal fees for lets of a year or less, or for renewing a lease of less than 50 yearsaccountant’s feesrents, ground rents and service chargesdirect costs such as phone calls, stationery and advertising for new tenantsThe expense should be incurred wholly and exclusively as a result of renting out your property.' I do hope that you have found my reply of assistance.
Customer: replied 1 year ago.
As a top rate tax payer, would it not be more advantageous to transfer the property into a company that I own and then pay only corporate tax?
Expert:  bigduckontax replied 1 year ago.
It might, Corporation Tax is levied at 20%. Any drawings you make from the company will have to be taxed under PAYE arrangements. Beware, the transfer of the property to a company would trigger a Capital Gains Tax (CGT) liability. You could claim Incorporation Relief from this, but that merely postpones the CGT until you ultimately dispose of your shares in the Company.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 1 year ago.
Thank you for your support.