Buy to Let Investment Market Assignment Example | Topics and Well Written Essays - 1500 words

debase to Let Investment Market - Assignment ExampleThis paper will focus on four-spot areas of the demoralise to let marketplace explanation of the taxes a property investor will be subjected to, how the property investor sess minimize their capital gains tax liability by dint of careful tax planning, how to be careful non to attract an investigation by the Inland Revenue, and, the tax benefits of setting up a property friendship to save property tax.There are a variety of taxes that the investor will be required to take in when investing in buy to let properties including stamp duty and inheritance tax. There are whatever taxes that can be reclaimed against the tax on rents for buy to let properties such as be of maintenance, such as insurance, cleaning, gardening, agents commission and some other reasonable management expenses (but not home improvements) and a contain and tear allowance of 10% of the rents received may be deductible. (Alan Harvey, 2006)liable when, lan d or residential property is purchased where where the purchase price is above 60,000, or where it is transferred and the outstanding mortgage amount is greater than 60,000. The range of stamp duty vary between 1% for properties less than 250,000 and 4% for properties over 500,000. It is also charge noting that there are certain areas that are exempt from stamp duty, where the property is purchased for less than 150,000. (Weller and McTernan, 2006)if at the timeThe other tax that the investor will be responsible is inheritance tax which is commonly referred to as the gift or death tax. Weller and McTernan (2006) rationalize the inheritance taxif at the time of your death you pass on part or the all in all of your estate then again the inheritor could be liable to pay Inheritance Tax. There is currently an IHT threshold level of 263,000 for the 2004-2005 tax year. Anything above this amount is taxed at 40% i.e. at the highest rate. This means that if at the time of death, your w hole estate is valued at less than 263,000 then the inheritor will bring no tax to pay. (Weller and McTernan, 2006)The two things you cant escape are death and taxes, but, why not make an investment work for the investor. By buying into the buy to let scheme, an investors main goal is to gain equity buy minimising what they will pay to the Inland Revenue department. The investors objective is to minimise their capital gains tax liability through careful tax planning.Minimising Capital Gains TaxCapital gains tax is payable if a property is change for a higher price that what was paid for it, or when a property or part of a property is transferred to someone who is not your spouse. (Weller and McTernan, 2006). Thus the capital gain is calculated by deducting the allowable cost and Inland Revenue tax reliefs, from the selling price of the property. Examples of allowable costs include, property extensions, purchasing associate costs etc. (Weller and McTernan, 2006). As some investor s fail to realise that when they sell their property, they could end up paying an extremely large tax bill of anywhere up to 40% of the net profit of the sales agreement of the property.