TAX RELIEF AND PROPERTY FINANCE

With property finance it is often a case of grabbing an opportunity as soon as it presents itself. Failure to consider the tax consequences beforehand may mean that it is not such a good deal after all. For example the interest may not qualify for tax relief, or may qualify tomorrow rather than today. If the money is raised overseas the UK Revenue and the lender may be pulling your arms in different directions over whether withholding tax should be deducted: and insult will be added to injury if a loss is incurred on repaying the loan in a foreign currency and that loss is not allowed for tax. At the same time a number of new and innovative financing schemes are coming on to the market. Are these tax effective? By explaining how the tax rides work and drawing attention to the various pit‐falls, this paper illustrates that tax planning needs to be done before signing the finance agreement rather than be faced by a firefighting exercise afterwards.