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I was talking to a new buy-to-let landlord client last week, who came in to visit me as a result of a referral from an existing property investment client, and one of the things that came out of the initial consultation was that the new client was also a medical professional looking to invest in property.
He was unsure of the options and opportunities available, and our meeting highlighted to him that more and more doctors, GPs and dentists are considering property investment in the UK as a way to increase their personal wealth, as well as assisting in areas such as wealth management and tax planning.
In my experience as a leading property tax accountant, I’m finding more medical professionals are looking at property investment as a viable and profitable way to increase their financial security and stability.
High rate tax payers have earnings which wold be subject to the new mortgage interest relief cap. This will force their tax rates to increase from the standard 40% to between 65% and 135% for some: property investment can represent an alternative to this, and offers up superb ways to mitigate tax liabilities.
As I advised my medical professional property investor, if you also add mortgage interest as an income stream, this will also impact personal tax allowances, and could lead to a loss of the current £11,500 tax-free level.
Where doctors have invested in long-term capital growth in certain areas of the UK – such as Greater London – and they are generating no profit, they can make a heavy loss based on the previous point.
I advised my new medical professional client that properties still remain a good investment option, given that the interest rates from banks are still low.
My new buy-to-let property client said that investment in pensions may be a good idea, as the tax relief is an attractive option. I reminded him that pensions have a distinct disadvantage, as investors are unable to access their pensions until they are a minimum of 55.
I advised my medical management client that investing in a limited company may present the best tax structure for him as a new property investor – mainly because they can ony be taxed at 19%, and the property investment business will be able to offset 100% of the interest costs against their income.
Another advantage of investing via a limited company structure is that my client could also take £5,000 dividends, tax-free. The limited company could also pay for childcare vouchers in the future, too.
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One of the most important things to remember when it comes to property investment in the UK is to ensure that your portfolio is being professionally managed, and that the right advice is being utilised.
If you’re a medical professional and are considering investing in property, get in touch for a consultation.
I’ve written some useful articles that medical professionals looking to invest in property can review here:
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