Prudent Use of Gearing Can Enhance Returns

Tax Considerations

There are some attractive tax breaks relating to buying property in the UK for rental investors. These should be factored into the investment equation. Professional tax advice should be obtained.


  • Rental income can be set against a variety of tax allowances thereby reducing income tax liability.
  • The most significant of these is loan interest. By “gearing up”, it is possible to structure a “tax neutral” investment. In turn, this can provide a significantly enhanced return on the equity contribution.
  • This means that profit on property investment London is subject to CGT (28%) rather than the more punitive income tax.
  • For non-resident / non-domiciled investors, there is a general exemption from capital gains tax in the UK on disposal of the property
Every tax case is different and you should seek appropriate advice for your own personal circumstances. 

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