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The importance of expert advice for property and investment portfolios

Becoming an investor in property is an alternative way to generate income, amass assets and create a legacy for your family. Structuring your property and investment portfolio in a tax-efficient manner is critical to helping maximise your returns in the short term and the longer term when you come to consider retirement, disposal or inheritance.

With the correct advice and structure, property portfolios can be a great addition to a balanced investment strategy.

However, due to recent changes in Section 24 tax and anticipated changes to capital gains tax (CGT), many portfolio landlords now require an extensive review of their position to assess the best option for them going forward.

Transferring to Gilson Gray as Head of Lettings in November 2019, has given me the opportunity to work with great legal specialists and access a network of elite professionals within the world of accounting and specialised finance.

In partnership with a select panel of accountants, we have built an expert team that advise on a multitude of areas including: financial management, accounting, specialist lending, tax and trust planning and real estate finance and developments.

Together, we will work with you to tailor a property investment strategy to your circumstances and objectives. Specifically, we will look at providing guidance on structuring your investment property portfolio in a tax efficient manner, taking account of any other financial assets, liabilities and your long-term objectives for the property.  We can advise on the structure of the portfolio whether that is holding it personally, in a company, a partnership or trust.

We will review the impact of these options on your tax situation, especially when considering income tax, capital gains tax, inheritance tax and pension planning.

Our team will advise on the development of a longer-term residential property investment strategy where relevant e.g. the effects of borrowing on returns; we will review and advise how best to maintain the tax efficiency of the property investment portfolio over the longer-term and how best to dispose of residential property investments in a tax efficient manner.

Case Study

We were engaged to complete a full review of a 14 million pound property portfolio owned by husband and wife, consisting of 132 properties all with individual interest only mortgages over 6 lenders and spread across Edinburgh, Airdrie, Coatbridge and Bellshill.

At the time of engagement, the portfolio had a large number of non-paying tenants and empty properties.

We worked diligently with the owner to put a plan in place to restore the vacant properties, whilst engaging with the non-paying tenants’ to regain their trust and assist in getting their payments back on track. Where relationships could not be restored with tenants’ in significant rent arrears appropriate measures were taken to gain vacant possession of them.

The portfolio had been stabilised.

However, changes to Section 24 Tax became a catalyst to review the clients’ full financial position and with a pregnant CGT position and looming changes expected by the Chancellor in the Autumn budget, a significant restructure was required.

The afore noted specialist departments have all played extensive roles in advising the clients’ and whilst the asset and financial management exercise is not yet complete, the advice given and measures taken to date are set to mitigate significant potential tax exposures, but more important than that they will relieve a heavy burden and stress from the clients, who have also gained some extra comfort as a result of putting in place succession planning measures.

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.

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