3 Ways To Avoid Property Taxes!
In this article, I’ll be talking once again about capital gains tax as I’m going to give you the three things you can do to pay zero non-capital gains tax.
Everyone's talking about capital gains tax at the moment because the government is talking about increasing the capital gains tax or doubling it.
At the moment, it's around 28 pounds and they're talking about bringing it up to 40 pounds or beyond as no one knows for sure what's going to happen.
I want to talk about the three ways you can avoid paying any capital gains tax as I recently did an article on what I think the government is doing and why I think they're doing what they are doing to try and sell more houses and shift more stock right now because there are too many buyers and not enough houses on the market.
The number one thing is that, if you live in a property which is your residence and then sell it, you pay zero capital gains tax.
Capital gains tax is a tax that you pay on profit from a property and so once you buy a property and it goes up in value, when you sell it the profit is used to pay capital gains tax.
However, if you've lived in it and it's your resident address, you don't pay capital gains tax and therefore if you're considering the fix and flip strategy i.e. buying houses to later on sell, it might be worth moving into them and the later on selling them for profit.
The second way to not pay capital gains tax is when you fix the property up and it goes up in value over time, instead of selling it, re-mortgage the property as you're basically borrowing against the house and using the equity as collateral to borrow money against that house.
When you refinance it, the money that you take out can be used to reinvest into more properties while paying no capital gains tax because you can't be taxed on debt making it a way of leveraging money.
This is the buy refurbish refinance rent strategy as you can rent out the house while it's giving you a nice income.
You're going to use the equity on another house and you're going to refurbish it then refinance it as you can recycle your money again and again.
The third strategy that you can pay zero capital gains tax is to buy your property through a company.
If you buy it through a limited company and then sell it even if it's not your company or part of a joint venture, you won't pay any capital gains tax either.
However, you will have to pay corporation tax which is way less than capital gains tax because corporation tax is around 19 pounds which might go up a little bit but it's still considerably less than capital gains tax.
I hope you found this article helpful as I am not a tax advisor and can only speak from experience and therefore would advise getting a qualified accountant to offer professional consultation depending on your situation.
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