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Found 8 results

  1. Thank you in advance for any advice or pointers to this grateful newbie. I have a few queries how I should take ownership of a property. The property was owned by my late father for 30+ years. The ground floor is a vacant commercial unit with the upper floors forming a maisonette currently occupied by tenants. I have submitted the paperwork to the Land Registry to transfer the property into my mother’s name as probate just been granted. My mother would like to gift the property to me: I need help to consider all the options. 1. I understand this can be held in my name or can be transferred into a limited company where I am a shareholder. There may be other options I am unaware of? If a limited company structure is chosen, I understand I can leave the rent in the company and only withdraw dividends when necessary. This appeals from the perspective of timing when I pay income tax, as I draw dividends from my own limited company. I imagine my children can also draw dividends from the company should they become shareholders in the future. They are very young so this is forward planning! 2. I would like to let the commercial premises on the ground floor of the property. Does having the property in a limited company structure limit my personal liabilities? 3. Does it also make it easier to sell the property in the future? 4. The company option also appeals to me from an IHT perspective, as I may be able to easily leave the company shares to my children in my Will - is this correct? I believe no SDLT is payable as my mother is not selling the property to me. I imagine CGT will be zero if my mother passes the property on to me within weeks of her taking ownership of the property. There is also an IHT point to consider. My elderly mother would be making a PET to me, which I recognise will fail if she does not live for seven years. 5. Is there a way for her to transfer the property to me where IHT can be mitigated in a shorter timeframe? Thank you very much for any advice.
  2. Evening all, I have set up a LTD co with myself as only director and shareholder at the moment as it was easy to do by myself and should satisfy everything from a Lenders perspective looking at my earnings etc. I have no properties purchased through this SPV yet but want to crack on soon. I have a wife and 2 infant children. I would like to eventually pass on on the wealth created to my children when I pass away so my questions are?: whats the best way to do this? can I set them up as shareholders at this early age or wait until they're older? Would it be a massive issue to change the structure once properties have been purchased? If anyone could give me any recommendations or point me in the direction of someone who can that would be greatly appreciated Many thanks
  3. Hi there, I have a good one to get the hive mind thinking. I potentially want to buy a house for my child. This isn't an IHT dodge or anything like that. It's actually just for personal reasons. She's a minor and would live in the house with her mother. In fact, my daughter doesn't even have to own it. She just has to live there with her mother. I'm trying to work out the most cost effective way (in the short / medium term) to make that work. Long term is probably less of an issue because it would be her main residence. I could buy it for her but she's too young to own it legally. And if it's in a trust, how does it work because I'll be paying the mortgage. It would have to be fairly heavily leveraged. I can put it in a trust but seems overly complicated. If I own it myself, I'll have to pay the additional Stamp and they pay CGT when she takes it. Thoughts? Kieron
  4. Hi there, I own a property company in London with a mixture of residential & commercial property. I understand that Property companies are not exempt from inheritance tax for my kids. For 30 years I have owned the freehold and for a portion used the commercial sections of the properties for my own business. Now I'm looking to lease the commercial areas. We have 4 residential units and 2 commercial units. We also have a personal property which exceeds £1Million. I have a few questions that id be grateful for your help with. I'd like to continue to benefit from the income from the business without leaving the kids with a large IHT bill when I pass away. I believe, that my children will be exempt from the first £1M of inheritance tax I think by 2020. 1. Would my business be included in the IHT exemption or not? 2. Since the business hasn't always been used a property company, would it be treated as a property company or as a retail business as it has been for 75% of its tenure? As such, would a portion be deducted from the inheritance tax bill or is it treated all as a property company? 3. Are there any property investments that are exempt from IHT? 4. What business types are exempt from IHT? 5. I wondered if there another way to re-structure the business so my children may avoid being liable for IHT, perhaps joint ownership in the hope I survive 7 years? Hope the above makes sense and thanks in advance for your help' Rgds S
  5. Hi all, My siblings and I are the only beneficiaries in our father's will and are due to receive various assets including two properties, and a portion of another property. We are assessing our options with how to administer the estate, and have two options: 1. Receive all assets as per the will and be subject to IHT. 2. Step aside as beneficiaries and allow all assets to pass to our mother, meaning no IHT due as they were married. My mother would then gift the assets to us in full. Thinking specifically of the properties, I am hoping that as they are mortgage free there would be no stamp duty payable, and also no capital gains tax due as they will be signed over to us straight after she receives them and thus no capital gain - is this correct? Then thinking into the future, if we were to let out the properties for a few years then sell, am I right in thinking CGT would be due on the difference between their value at the time they were gifted to us and their sale price? Or would the entire sale value be subject to CGT as they were signed over to us for free? It seems that option 2 is the best option in any case, but if anyone could provide any guidance as to our position on stamp duty and CGT if we were to take that option, and let me know of anything I might be missing from the equation... I would be hugely appreciative. Thank you. TDH
  6. Louise and her team of property tax specialists have been speaking with a number of clients that are concerned about income tax, given the budget changes, and how they should structure their property business within a family. There are a number of concerns that people ought to be aware of: - Are you keeping your fair share of earned income or is HMRC taking more than what seems reasonable? - Are you protecting your hard earned wealth for future generations, or are your assets under threat from HMRC’s Inheritance Tax or family mis-use? - Are you getting the best returns from your investments and assets, or are your investment managers getting a better deal? - Do you know how your pensions are performing, and are you pleased with it or could it be better? There are many examples I've been told where buy-to-let landlords build wealth with a clear expectation of how they want this passed through generations of family, but due to lack of wealth management, the wrong people receive the money and assets. And if a property investor hasn't drawn up a Will before their death, the Crown receives ALL of the assets. It's also worth remembering that when you die, you could be leaving loved ones to deal with the fact that the estate is subject to HMRC’s 40% Inheritance Tax. Wealth management and tax planning are so vital. I hope this article provides some thought of how you structure your property business going forwards url: http://www.optimiseaccountants.co.uk/wealth-management-tax-planning-for-property-investors/#.WYlwQtMrKRs
  7. Do you own assets that will eventually be passed on to your children? Are you worried about inheritance tax? The problem — capital gains tax (CGT) & inheritance tax (IHT) Many parents throughout the UK wish to transfer assets to their children now to avoid inheritance tax (IHT) in the future and we receive many calls from clients and non-clients who have heard about lifetime transfers. Basically, if you transfer assets up to the IHT threshold and survive for seven years after the transfer, then that transfer will not form part of the IHT liability upon your passing. Unfortunately, however, parents still have to pay capital gains tax (CGT) on any transfers made between them and their children, even if the transfer is a gift. HMRC deems that any gifts of assets are liable for CGT at market value. If an asset is valued at £100,000 and is given to a child for no consideration, then the £100,000 is what is used to determine the CGT liability. This causes people a huge headache as they know that their assets may be subject to IHT if they do not act quickly, but even if they do, their assets are subject to CGT. Can you relate to the above? A real life client example — John passing assets to his son James For the purpose of this article we are going to name my client John to protect his identity. John has £1.5m of assets, of which £1m is in residential properties and £500K is the net asset value of his trading business. He wishes to set up his son James (20) in business to give him a head start in life as university is not on the agenda for him. John thinks about transferring all of the residential properties and the business to his son so that he can leave the UK for a sunnier climate. John knows that making such transfers will help him mitigate IHT if he survives for seven years afterwards. At the time of writing the transfer limit was £325,000 and the IHT threshold upon death is also £325,000. This means that James would have to pay 40% tax on any excess over £750,000. Ultimately this would mean selling off some assets. Transfers to mitigate CGT and IHT As we have identified, there are £500,000 nets assets in his business. John can transfer the business to his son and claim gift relief, meaning that John does not pay CGT but his son will have a deemed cost of £0. This means that James will have to pay more CGT in the future — he will pay CGT not only on the increase in value of the business during the time he has owned it, but also the deferred amount due when it was gifted to him. An example of how gift relief works was included in this article. When it comes to the residential properties, John considers a transfer up to the lifetime transfer value of £325,000, half of the residential property value, but then realises he would have to pay CGT upon such a transfer. Remember, however, that John has an annual capital gains exemption of £11,100, which means that any gain below this amount would be CGT-free. John could therefore consider transferring one or two properties to his son per year to take advantage of this allowance. Practical steps you should now take to mitigate IHT and CGT It is one thing to understand the theory but it is another to put it into practice. This is why I have written a step-by-step guide to implementing this strategy: Identify the nets asset value of your trading business assets and transfer those using gift rollover relief Transfer assets over time that are not trading assets to utilise your capital gains exemption
  8. Do you own assets that will eventually be passed on to your children? Are you worried about inheritance tax? The problem — capital gains tax (CGT) & inheritance tax (IHT)Many parents throughout the UK wish to transfer assets to their children now to avoid inheritance tax (IHT) in the future and we receive many calls from clients and non-clients who have heard about lifetime transfers. Basically, if you transfer assets up to the IHT threshold and survive for seven years after the transfer, then that transfer will not form part of the IHT liability upon your passing. Unfortunately, however, parents still have to pay capital gains tax (CGT) on any transfers made between them and their children, even if the transfer is a gift. HMRC deems that any gifts of assets are liable for CGT at market value. If an asset is valued at £100,000 and is given to a child for no consideration, then the £100,000 is what is used to determine the CGT liability. This causes people a huge headache as they know that their assets may be subject to IHT if they do not act quickly, but even if they do, their assets are subject to CGT. Can you relate to the above? A real life client example — John passing assets to his son JamesFor the purpose of this article we are going to name my client John to protect his identity. John has £1.5m of assets, of which £1m is in residential properties and £500K is the net asset value of his trading business. He wishes to set up his son James (20) in business to give him a head start in life as university is not on the agenda for him. John thinks about transferring all of the residential properties and the business to his son so that he can leave the UK for a sunnier climate. John knows that making such transfers will help him mitigate IHT if he survives for seven years afterwards. At the time of writing the transfer limit was £325,000 and the IHT threshold upon death is also £325,000. This means that James would have to pay 40% tax on any excess over £750,000. Ultimately this would mean selling off some assets. Transfers to mitigate CGT and IHTAs we have identified, there are £500,000 nets assets in his business. John can transfer the business to his son and claim gift relief, meaning that John does not pay CGT but his son will have a deemed cost of £0. This means that James will have to pay more CGT in the future — he will pay CGT not only on the increase in value of the business during the time he has owned it, but also the deferred amount due when it was gifted to him. An example of how gift relief works was included in this article. When it comes to the residential properties, John considers a transfer up to the lifetime transfer value of £325,000, half of the residential property value, but then realises he would have to pay CGT upon such a transfer. Remember, however, that John has an annual capital gains exemption of £11,100, which means that any gain below this amount would be CGT-free. John could therefore consider transferring one or two properties to his son per year to take advantage of this allowance. Practical steps you should now take to mitigate IHT and CGTIt is one thing to understand the theory but it is another to put it into practice. This is why I have written a step-by-step guide to implementing this strategy: Identify the nets asset value of your trading business assets and transfer those using gift rollover relief Transfer assets over time that are not trading assets to utilise your capital gains exemption
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