How we help with property tax planning
How we help with property tax planning
Investing in property is a popular move – but it can also be problematic if it’s not handled properly.

If your practice is successful, and you’re earning above what you need for the everyday, it makes sense to put your profits to good use. Although you might choose to invest in stocks and shares, or even to get creative with collections like wine or artwork, property often remains a go-to asset class for those who have surplus cash.

Property is seen as an obvious, safe bet, because it’s an asset with clear potential for leverage with a low cost of capital. For most of us, we’re likely to be comfortable with getting a loan or using savings to invest in property, whereas we’d probably be less relaxed if the money was simply going towards that next case of pinot.

However, when it comes to tax planning, things can become complicated – and this is where it makes sense to engage with a professional to ensure that your ‘safe bet’ doesn’t cost you serious money.

At Hive, we recognise that many of our clients seek to make this kind of investment, and so we offer comprehensive support with property tax planning. This can begin before you’ve even made a purchase. If you’re nearing the exit point of your career, our wealth planning discovery programme helps practice owners get to the heart of what they want to do with their cash after sale. This process can therefore be a helpful one ahead of making any decisions about how to spend your money.

If you’ve already decided to buy a property, but haven’t yet done so, we can advise on the best ownership structure from a tax perspective. We can also help work out how you’ll fund your purchase; whether that’s additional dividends from your company or via bank debt.

Alternatively, you may already have a large portfolio that’s generating profit inefficiently. For instance, an individual portfolio generates more tax than a limited company, so if you’re making a significant rental profit, personal taxes could be high compared to those of a company.

However, moving from an individual portfolio to a company portfolio is highly complex, with many ways to make a misstep. Ultimately, by trying to do this yourself, you could end up in a worse tax position than you need to be. This is one area where specialist advice pays for itself.

It also pays to think of the future, and we can help you come up with a cohesive plan for passing on your property. This can avoid rash decisions that sound good but don’t make sense for your circumstances, such as transferring your property to a company without considering the fact that you’ll want to sell it again in just a few years.

This may all sound a little off-putting, but when property ownership is handled correctly, it can be a good investment. Despite the fact that mortgage rates are rising, property is still relatively cheap finance, which will pay for itself in rent or holiday letting income.

The crucial thing is to deploy the right tactics around tax – doing the right thing at the right time, for the right reasons, and doing it properly.

This is where we come in. With extensive experience in this area, we’re able to help guide you to the solution that’s best for you. Property is a highly valuable asset, typically involving big numbers, so property tax requires care, attention, and the right advice. If you’d like to find out more about how we can help, or if you’re considering buying a property, contact us.

The information contained in this article is based on the opinion of Hive Business and does not constitute formal tax advice. Any tax outcomes will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future. You should seek specific advice before embarking on any course of action. Hive Business does not provide regulated Financial Advice, including advice on investment, insurance or lending products or their suitability for you. This article is provided for information only and does not constitute, and should not be interpreted as, investment advice or a recommendation to buy, sell or otherwise transact, or not transact, in any investment including Bitcoin and other crypto. Any use you wish to make of any information contained within this article is, therefore, entirely at your own risk.

By Simon Vincent Tax Director
If you have any questions or comments about this article, please get in touch.
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