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