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Ever wondered what the Section 24 law means for Property investors? Well, in today’s episode of The Progressive Property Podcast there’s no need to wonder as your host, Kevin McDonnell tells us everything you need to know about the 4-stage law affecting Property investor’s mortgages. Discover the pros, cons, costs, and how you can save money by moving your properties over to a Limited company rather than keeping them in your personal name. Tune in today to save money and keep up to date with the property law affecting your investment portfolio.
KEY TAKEAWAYS.
1) Have a limited company. You may already have one or you may need to make one. An important thing to note is that to be able to hold properties in a limited company, the properties must be owned by more than 1 person.
2) Note the pros and cons in terms of costs. If you move your properties into a limited company, this enables you to defer your capital gains tax under incorporation relief. However, if you were to sell the properties eventually, you will have to pay capital gains.
3)You need to think about the type of mortgage you have. You may need to redeem your mortgages, however, some companies that lend personally, do not lend to limited companies. Mortgages for limited companies also tend to be higher. There may also be penalties for those on fixed-rate mortgages.
4) Consider future possibilities. Perhaps the government will decide to reverse their decision to introduce section 24. Will the cost of transferring to a limited company such as mortgage costs and legal costs. Could you pay all this, for the government to reverse their decision? Also valuable to consider the repercussions of transferring to an LTD company, when it comes to selling the property.
-What to do about any future property purchases? Simply put, Always buy under a limited company as section 24 does not currently affect this.
– Seek opportunities and look for ways to help people, and perhaps make some profit from them. If a person decides to sell all their properties, they are only entitled to defer X amount of capital gains (£12,000 per person per 2019 financial year- this differs each year). If you are able to secure a deal to purchase each of their properties individually each financial year, this could save them money in capital gains.
– To summarise, seek professional advice in terms of your personal situation. It may be valuable for you to stick with your current situation and continue having the properties in your name, however, it could also be a benefit to have your properties transferred into a Limited company.
BEST MOMENTS.
“If you have a small mortgage with a good profit, you might not want to do anything”
“if you do have properties in your name and have mortgages on them, then it is very possible that you will see a significant rise in your tax bill. “
“If you own property in your own name and have no mortgage on them, then section 24 will not make any difference to tax that you pay on your business.”
“You could end up doing all this, only for the government to turn around and reverse their decision”
“Is there an opportunity to take advantage of those who own in their personal name? Absolutely!”
VALUABLE RESOURCES:
https://www.upad.co.uk/landlord-calculators/section-24-tax-calculator
ABOUT THE HOST
Kevin McDonnell is a Speaker, Author, Mentor & Professional Property Investor. He is an expert when it comes to creative property investment strategies. His book No Money Down: Property Invest talks about how to control and cash flow other people’s property to create financial freedom.
CONTACT METHOD
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December 12, 2024
December 11, 2024
For anyone looking to expand their real estate horizons beyond borders, this podcast offers a treasure trove of insights from top agents around the globe. Whether you’re looking to showcase your expertise as a real estate professional or uncover the next great investment opportunity as a buyer, Global Real Estate Insider provides the expert advice and market analysis you need to make informed decisions in the global real estate arena.
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