| The deadline is fast approaching to get in your self-assessment tax return and for many whose incomes have dried up the thought of an impending bill from HM Revenue and Customs will be daunting.
Landlords in particular have been battered by rent falls and mounting arrears during coronavirus. Yet their tax bills are likely to be higher this year following a crackdown on many buy-to-let reliefs.
They should not despair, however, as there are ways they can use the pandemic to their advantage. For example, landlords who have been unable to fill their properties may be able to claim back the cost of council tax and heating during the void period.
Property investors could also make use of the current stamp duty holiday to change how they own properties, for instance by moving them into a company structure or transferring them to a spouse. This can be more tax efficient in the long-run, but incurs stamp duty so it is best to do so before the tax break ends on March 31.
Many buy-to-let owners have cottoned on to this, and the number of them who set up a limited company to manage their properties hit a record high in 2020. Others have been cashing in on the staycation boom and converting their homes into furnished holiday lets. Crucially, holiday lets and rental properties held within a company can offset all mortgage interest against revenue.
Landlords can find plenty more tips and tricks on how to reduce their tax bills in our three part series. The first instalment can be found here.
Tax experts are advising second home owners who are thinking of getting rid of properties to do so soon, as there are rumours that Chancellor Rishi Sunak will hike capital gains tax rates.
Other proposals for how the Treasury can fill the gaping hole in its coffers is to replace council tax and stamp duty with a property levy, which would hit buy-to-let owners particularly hard. Landlords who do decide to sell up before any changes should make use of all available CGT reliefs, which we look at in this article.
As head of personal finance Lauren Davidson argues, it is more important than ever for landlords to be savvy, as many are having to grapple with falling rents and letting agents hiking their fees.
Invest 100k for fun – win 10k for real
You have three days left to join the race for a prize of 10,000 in our Fantasy Fund Manager game. Players build their own portfolio of stocks and investment trusts from the FTSE 350, aiming to make the highest returns before the game ends on Feb 19 2021. It's free to play for subscribers and you must be in the competition by Jan 22 to be eligible for the top prize.
To play, click here. And join our Telegraph Investing group on Facebook here to find out how others are competing.
Make the most of all our content by signing up for a subscription here – your first month is free. And don't forget to visit Telegraph Money for news, advice and inspiration. |
