Alan Pink considers situations where proper planning can pay dividends, or indeed is essential.
When buying real property, the sixty-four thousand dollar question that you have to ask at the outset is: ‘is this property being bought for trading or investment purposes?’ The distinction is a very important one because our tax system treats properties, acquired as part of a property development trade, completely differently from properties acquired as long-term investments. This article will look at the different categories of tax separately, so as to bring out the important points under each. It will explore:
- VAT;
- Tax on profits from selling the property;
- Tax on rents; and
- Inheritance tax planning
