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Sole property ownership can save on property income tax

Article Summary: In this article we reveal when you are likely to pay less (or avoid) property taxes by holding property in a sole name.

The ideal scenario for buying a property as a sole owner is if you have no income.
The reason for this is because you can utilise you annual tax free personal allowance, which is currently set at £5,035.
However, in the unlikely case of you having zero income, then it is still worthwhile owning property in a sole name if you are not a higher rate tax payer i.e. you do not pay tax at 40%.
In simple terms, the further your income is away from the higher rate tax band, then the more you will save in income tax by having the property in your sole name.
This is especially true if your partner is a higher rate tax payer.
The following two case studies will illustrate these points.
Case Study
Joanne is married woman but does not work.
Her husband is a high flying executive who earns £70,000 per annum.
Upon the death of a relative she is left £70,000.
She uses this whole amount to purchase a property.
She makes £380 rental profit per month. (Her expenditures are low as she bought the property with straight cash s o therefore shy has no outstanding mortgage).
This means that she makes an annual rental profit of £4,560.
She is not liable to pay any tax on this amount as it is within the annual personal income tax allowance of £5,035.

Case Study
Lisa is a married woman and earns £15,000 per annum as a store sales assistant. Her Husband is a hotel manager and earns £45,000 per annum.
They decide that they want to start investing in property and purchase a property for £45,000.
They take tax advice before investing and are told that they will pay less annual income tax if the property is purchased in the sole name of Lisa.
This is because she is not a higher rate tax payer.
The ideal scenario for buying a property as a sole owner is if you have no income.
The reason for this is because you can utilise you annual tax free personal allowance, which is currently set at £5,035.
However, in the unlikely case of you having zero income, then it is still worthwhile owning property in a sole name if you are not a higher rate tax payer i.e. you do not pay tax at 40%.
In simple terms, the further your income is away from the higher rate tax band, then the more you will save in income tax by having the property in your sole name.
This is especially true if your partner is a higher rate tax payer.
The following two case studies will illustrate these points.
Case Study
Joanne is married woman but does not work.
Her husband is a high flying executive who earns £70,000 per annum.
Upon the death of a relative she is left £70,000.
She uses this whole amount to purchase a property.
She makes £380 rental profit per month. (Her expenditures are low as she bought the property with straight cash s o therefore shy has no outstanding mortgage).
This means that she makes an annual rental profit of £4,560.
She is not liable to pay any tax on this amount as it is within the annual personal income tax allowance of £5,035.

Case Study
Lisa is a married woman and earns £15,000 per annum as a store sales assistant. Her Husband is a hotel manager and earns £45,000 per annum.
They decide that they want to start investing in property and purchase a property for £45,000.
They take tax advice before investing and are told that they will pay less annual income tax if the property is purchased in the sole name of Lisa.
This is because she is not a higher rate tax payer.

Article Source: http://www.upublish.info

About the Author:
Amer Siddiq
Amer Siddiq is founder of the http://www.property-tax-portal.co.uk "> Property Tax Portal . The website is dedicated to helping landlords, investors and accountants lower their http://www.property-tax-portal.co.uk "> property taxes .