Structure is absolutely critical for property investors, affecting whether losses can flow back to owners and at what rate future profits are taxed.
How lending is structured is also vital. Investors should always look to maximise debt for which they can receive a tax deduction (such as debt associated with lending for investment property) and minimise non tax efficient debt (personal loans and mortgages).
"Claiming all relevant costs is important" emphasises Jon Mellors, "and there are useful options available to help cash flow, such as special tax code applications where taxpayers can estimate the rental loss for the coming year to allow their PAYE rate to be reduced. This means that the tax refund is received throughout the year rather than when you file your tax return. It provides a cash flow benefit and means investors have more cash available to meet any rent shortfall or the ability to pay down debt quicker and minimise interest."
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PocketRent is an online property management tool that helps you to manage your rental properties and improve communication between you and your tenants. Our PocketRent dashboard gives you access to your properties' information 24/7 from anywhere in the world at any time.