Avoiding CGT on rental properties - USERNAME:regaziz - 28/11/2014

Tax Question:

A friend of mine owns around 30 properties in UK. He is a UK Residence and 90% of his properties are rented out. He is thinking of selling some of his properties:

What are his tax liabilities as it is now?

Would he be better off forming an Offshore company and transfer some of his properties to the offshore company? Can he use a Nominee Agency for his rental business? Will this be an advantage when he decide to sell properties?

Any other suggestions

Many thanks

Answer:

If he is UK resident he would be subject to UK CGT on the disposal of any of the properties. CGT would be at 18% or 28% of any capital gain depending on his other income.

Forming an offshore company would not achieve a tax saving. In particular any transfer of the UK properties (eg to anotrher company) would crystallise the capital gain. In addition there would be additional problems in using the offshore company tax efficiently if he was UK resident, given the numerous anti avoidance rules.

Using a "nominee" company would have no advantage - the company would be just a nominee and the capital gain would still be taxed on him personally.

He could look at a property management company (//www.wealthprotectionreport.co.uk/public/141.cfm) but this wouldn't effect the CGT position on a disposal of the properties (but could reduce tax on the rental income).

The simplest way to avoid CGT would be to become non UK resident.