Investors

While you’ll almost certainly want to seek independent advice before committing to an investment, we’ve put together this information to point you in the right direction and provide a brief overview of the tax issues that may be involved.

Mortgages

Mortgage facilities are available, subject to status and valuation, for each of Bournston’s properties.

Our mortgage brokers who understand the student sector are:

Resident Broker Ltd. Contact Jamie Marcoons on 0845 345 3599.
SPF Sherwins. Contact Richard Stone on 0845 450 5747 or by email at rstone@spf.co.uk.
Lyndhurst Finance Management. Contact Nick Mann on 0800 435 648 or by email at nickmann@lyndhurstfm.co.uk.
Real Property Finance Ltd. Contact Alan Laslett on 0791 232 6229 or by email at  alan@realpropertyfinance.co.uk.

Tax

We recommend that all investors contact an appropriately qualified accountant or tax adviser to discuss their individual tax position. The following is an overview of some of the main tax issues associated with investing. Please note, this advice is a guide only, it is not intended to be a complete source of information.

Inheritance tax

All investment properties will form part of an investor’s taxable estate.

Income tax

For income tax purposes, the Inland Revenue will view investors as running a rental business. Broadly speaking, taxable income will be calculated by subtracting allowable expenses from the amount of gross rent involved.

Allowable expenses include:

• Management fees
• Service charges
• Legal and professional fees relating to ongoing letting eg lease renewal, eviction costs
• Repair and maintenance costs
• Interest incurred on any loans taken out to purchase the apartment
• Annual wear and tear on the cost of providing furniture and furnishings

Losses incurred on the rental business can be offset against other rental taxable income or gains for the current tax year. Unrelieved losses are carried forward to set against future profits.

The capital cost of acquiring an apartment (including any legal and professional fees in respect of the acquisition) or any furnishings or fixtures are not classed as allowable expenses.

Capital gains tax

The chargeable gains on the sale of the apartment will qualify for taper relief at the non-business asset rate. Part of the gain will be exempt from capital gains tax after three years’ ownership.

After 10 years’ ownership, 40% of the gain may be exempt. This means that for a 40% taxpayer, the tax on a gain sale will be reduced to 24%, and for a basic rate taxpayer this will drop to around 13%.

Stamp duty

Properties with a value of less than £120,000 are exempt from stamp duty, while a stamp duty of 1% is currently payable on all properties between the values of £120,000 and £249,999. This rises to 3% if the value is between £250,000 and £499,999, and 4% for apartments worth over £500,000.

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