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The Seven Deadly Tax Saving Strategies - One off Seven
Welcome to the First of Seven Property Tax Saving Strategies brought to you by Homes Seekers on behalf of Amer Siddiq.
We know it is rather long - 3 pages - however reading this may well save you money so we feel it is well worth the read.
Strategy 1 - Property Partnerships
A great way to boost your annual income and have an annual holiday courtesy of the taxman!
When I learned of the benefits of partnerships, you can bet your bottom dollar that I quickly changed my investments into joint ownership, just so I could really PAY LESS TAX!
'Partnerships - Simple, but very tax effective!'
One of the simplest and yet most effective property tax strategies is to buy a property with multiple owners in the form of a partnership.
The number of partners is irrelevant, but the two most important considerations are that
a) your partners must not be higher-rate taxpayers (by this I mean that they must not be taxed at 40%);
b) they MUST be trustworthy.
If you buy in a partnership, then you MUST make sure that the partners with whom you are purchasing are people that you implicitly trust, i.e., a spouse, your mother or father, etc.
This is not just for tax reasons but is just simply good BUSINESS PRACTICE.
As a golden rule, if you are a higher-rate taxpayer, i.e., YOU pay tax at 40%, then ALWAYS try to purchase with either a lower-rate taxpayer or, even better, with
someone who pays no tax at all.
'How are partnerships split?'
All property owned jointly between husband and wife is treated as an equal 50:50 split as default by the Inland Revenue.
However, this is not the case for property owned between non-husband and wife. This is because the property ownership must be based on fact, e.g., Jo has funded 10% of the deposit, and Jack has funded 90% of the deposit.
In this case the property would be treated as a 90:10 split in Jack's favour.
'Do you have a non-income-generating partner?'
If your partner does not work, then the first £4,745 that your partner earns through property income will be exempt from tax! In addition, the next £2,020 will only be taxed
The next Tax Strategy - in Seven days' time!
You may be thinking,
'But what if I can't purchase in a partnership as I have no trustworthy partner?'
'Both my partner and I are higher-rate taxpayers, so how can we get a tax saving?'
Well. if you are, then this is great as it means YOU ARE thinking about saving on property taxes!
About the Author: www.propertyconceptonline.com provides readers with the latest reviews, articles, commentaries and write-ups on Tax Saving Strategies, final tax strategy, annual income tax bill