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Strategy 6 - Transferring & Gifting Properties to SLASH

Your Tax Bill!

Don't let YOUR death burden YOUR family with tax bills!

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As I mentioned at the end of the previous Tax Strategy - INHERITANCE TAX is FAST becoming a 'tax bombshell.'

Unless YOU start planning for this tax NOW, you run the risk of leaving your loved ones with significant tax liabilities in the future.

In this strategy I will outline some simple yet very effective methods you can use to limit the tax liabilities on both yourself and your loved ones.

So, let's get on with this strategy and start to understand how you can tackle the issue of inheritance tax now!

Just like the previous property tax strategy, I recommend that you print off and file this strategy away so that you have easy access to it whenever you are off-line!

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What is inheritance tax (IHT)?

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Inheritance tax is commonly referred to as both a 'gift tax' and also as a 'death tax.'

If, during your lifetime, you 'gift' part or the whole of your estate, then the inheritor will be liable to pay inheritance tax.

Similarly, if, at the time of your death, you pass on part or the whole of your estate, then again, the inheritor will be liable to pay inheritance tax.

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Is there an IHT allowance?

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YES - but it is not really that favourable, given the<---****HYPERLINK****--->? http://www.homes-seekers.net?> property price increases over the past few years.

For the 2004-2005 tax year, the IHT threshold level is ?263,000.

Anything above this amount is taxed at 40%, i.e., at the highest rate.

This means that if, at the time of death, your whole estate is valued at less than ?255,000, then the inheritor will have no tax to pay.

But, if it is over this amount, then anything above the ?263,000 threshold level will be taxed at 40%.

Case study:

At his time of death, John had an estate that was worth ?240,000. His estate was made up by his house, which is worth ?200,000, and he has ?40,000 cash.

He gifts his entire estate to his son.

His son will have no IHT liability as it is below the threshold level

Description

In this final tax strategy I want to talk about two different methods you can use to cut your annual income tax bill.

These two methods are known as

- the 10% wear and tear rule;

- the renewals basis method.

They are relatively simple strategies to understand, and they both relate to the furnishings provided in a property. However, so many investors get confused by not knowing which method they can use and how it will affect their annual property income tax bill.

Keyword; Tax Saving Strategies, Property Tax Saving, property price

Pen name: Amer Siddiq

http://www.homes-seekers.net

sales@homes-seekers.net

Author's biography:

<---****HYPERLINK****--->"http:// www.propertyconceptonline.com">www.propertyconceptonline.com provides readers with the latest reviews, articles, commentaries and write-ups on Tax Saving Strategies, Property Tax Saving, property price <---****HYPERLINK****--->"http://www.whatweusedtowear.com">related subjects.

21 The Seven Deadly Tax Saving Strategies - Five of Seven

Welcome to the Fifth of Seven Property Tax Saving Strategies brought to you by Homes Seekers on behalf of Amer Siddiq.

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Strategy 5 - Will a Ltd. Company Improve YOUR

Tax Position?

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Some of the most burning tax questions property investors have are

- 'Should I buy my property through a Ltd. company?'

- 'Should I move my properties into a Ltd. company?'

- 'If I own my properties in a Ltd. company, will I avoid paying property tax?'

If you have not already asked these questions, then I am certain you will be doing so in the near future, especially if you intend to continue investing in property and growing your portfolio.

To be honest, answering these questions is not straightforward (tax never is!), and the answers depend on your

a) chosen investment strategy;

b) personal and financial circumstances/ambitions;

c) for how long you intend to hold the properties.

However, before you even decide whether a Ltd. Company will improve your tax position, there are some very basic rules/guidelines that must be understood.

In this strategy, Ian McTernan, one of my property tax gurus and author of our best-selling guide 'How to Use Companies to Cut Your Property Tax Bills,' will tell you what you must consider before you can decide if holding your properties through a Ltd. company will benefit YOU!

>>> http://www.property-tax-portal.co.uk/index.php?tpl=indexCutPT

So, let's get cracking with this strategy and learn from Ian's words of wisdom!

Just like the previous Property Tax Strategy, I recommend that you print off and file this strategy away so that you have easy access to it whenever you are off-line!

Take it away, Ian...

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Already a property investor?

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Do YOU already own investment properties?

Are you already on the buy-to-let investment ladder?

If the answer is YES and you are now wondering whether moving your properties into a Ltd. Company is a good idea, then consider the following FACT:

*** Properties must be transferred into a Ltd. company at market value! ***

Yes, that's RIGHT!

Moving properties into a company is treated in the same way as if you were selling the properties!

What this means is that if you bought your investment property five years ago and you would now like to move it into a Ltd. company, then you are likely to have to

pay an IMMEDIATE capital gains tax liability.

This is purely due to the fact that property prices have significantly increased over the past few years!

The exception to this rule is if the property is your principle private residence.