Tag: investment

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Day Trading

How the Forex Day Trading System Will Sky Rocket Your Investment

Forex day trading systems can be a very lucrative opportunity if you are hoping to make some good money over the years. There have been many stories from different parts of the world where different individuals amassed huge profits from the trading system. There are many factors that make the Forex trading industry very popular among new traders. One major attraction is definitely the huge career growth it offers. Also, this is a rapidly developing business venture which offers tremendous opportunities for many people across the globe. Currently, the world economy is witnessing a global recession like never before and amazingly, the Forex trading business still remains a hot choice for most investors.

The success stories that are coming out from different corners of the world might create the false impression that this trading business is devoid of all risks and is a perfectly safe and profit assured business. But, the truth lies far away from this. Like any business opportunity, the Forex business too has its own risks and shortcomings. The fact is that there are many people who have lost fortunes in the trading business. When you go into the depths of these failures, one will realize that such people considered the trading business as a get rich scheme. The key to successful trading lies in years and years of hard work and following a clear-cut strategic plan.

With the advent of the online trading, the Forex trading business has taken a huge leap. The internet has made it possible for traders to conduct trades any time they want. They can check the market values from the comforts of their home and make transactions. They are quite different from the conventional stock market exchanges in the sense that the Forex trading can take place twenty four hours a day. Therefore, it is up to the trader to decide when to make the investment and he can complete it online. The introduction of the online trading facility has opened the gates of Forex trading to global users. All these factors have added to the wide spread popularity of these Forex day trading systems.

There are numerous websites on the internet claiming that their online trading system can help you to earn thousands of dollars without having to do anything at all. These systems often sound exaggerated. The golden rule to follow is that if something sounds too good to be true, it probably is not. Most of these programs are scams which are intended to cheat you out of your hard earned money.

The Forex robots are software applications that are designed to carry out the trading operations on their own. They have a vast database of data and information which helps these robots to make investments and conduct transactions online. They are highly user friendly and do not require the user to be computer savvy to use them.

All these ensure that the Forex day trading system will continue to have a steady growth and will remain a lucrative career opportunity in the twenty first century.

Categories
Budgeting

Investment Evaluation Criteria

Three steps are involved in the evaluation of an investment:

• Estimation of cash flows

• Estimation of the required rate of return (the cast of capital)

• Application of a decision rule for decision rule for making the choice

Investment decision rule

The investment decision rules may be referred to as capital budgeting techniques, or investment criteria. A sound appraisal technique should be used to measure the economic worth of an investment project. The essential property of a sound technique is that is should maximize the shareholders wealth. The following other characteristics should also be possessed by a sound investment evaluation criterion:

• It should consider all cash flows to determine the true profitability of then project.

• It should provide for an objective and unambiguous way of separate good projects from bad projects.

• It should help ranking of projects according to their true profitability.

• It should recognize the fact that bigger cash flows are preferable to smaller ones and early cash flows are preferable to later ones.

• It should help to choose among mutually exclusive projects that project which maximizes the shareholders wealth.

• It should be a criterion which is applicable to any conceivable investment project independent of others.

These conditions will be clarified as we discuss the features of various investment criteria in the following posts.

Investment Appraisal Criteria

A number of investment appraisal criteria or capital budgeting techniques are in use of practice. They may be grouped in the following two categories:

1. Discounted cash flow criteria

• Net present value

• Internal rate of return

• Profitability index (PI)

2. Not discounted cash flow criteria

• Payback period

• Accounting rate of return

• Discounted payback period

Discounted payback is a variation of the payback method. It involves discounted method, but it is not a true measure of investment profitability. We will show in our following posts the net present value criterion is the most valid technique of evaluating an investment project. It is consistent with the objective of maximizing the shareholders wealth.

Categories
Taxes

Alternatives to Direct Property Investment

Residential property investment

UK residential property has been the best performing asset class in the last 50 years according to the Barclays Capital Equity Guilt Study & ODPM housing statistics. These figures showed that in real terms (after inflation) £100 invested in a portfolio of shares in 1930 would have grown to a little over £363 by the end of 2004 compared with £767 if that same amount had been invested in residential property.

Despite this, it has been very difficult to invest indirectly in the residential property market.

Why have investment funds not invested in residential property if the returns are so good?

There are a number of reasons why professional investment funds have stayed away from direct investment in residential property. Firstly, the whole area of private landlordism has been a real ‘political hot potato’ up until the last 10 years. Housing was seen by some members of the political classes as something not to be profited from, like the NHS. The very idea of private investors making money out of peoples need for housing was seen as morally wrong. As a consequence the Labour Party for years had introduced a whole series of restrictive Rent Acts, which prevented landlords charging market rent as well as obtaining vacant possession. An investment in an asset that the investor was prevented from selling at its true market value (with vacant possession) was obviously not something the institutions wanted to get involved in.

The other factor that put them off was the relative intensiveness of the management process. An investment fund can invest £5+ million in a single commercial building, with one tenant who remains for 25 years. A comparable sum invested in a residential property could involve having to buy and set up say 50 individual properties at £100,000 each. Then each of these properties & tenancies would have to be managed, all this is time consuming and expensive.

As a result of this ambivalence to the sector, very little effort has been put into research that compares residential investment performance against other asset classes. Further details on how investment in residential property compares against other investment classes can be found in the Landlords Bible.

Why not invest all my money in residential property if it performs so well?

There are a number of reasons why it always good to have a range of investments. If you already have a large ‘buy-to-let’ portfolio of residential property without much of your assets invested elsewhere, you may wish to consider diversifying your investments. The classic phrase is ‘don’t carry all your eggs in one basket’. Investing is much the same. Whilst over the years I have always held most of my assets in residential property; I have also held a proportion in alternatives such as shares and deposit accounts. As an active investor I am always looking for new and innovative methods for diversifying my portfolio. The theory is that if one investment isn’t doing so well, as was the case for shares for a number of years. Then some of the other investments are doing a lot better. The result you hope is that overall your capital keeps on growing.

You may still be keen to invest more funds in residential property but feel that you don’t have the time or skill to do it yourself. What then?

Alternative to direct property investment

There are a number of drawbacks with direct property investment that those already in the sector are all too aware of. This isn’t to say that these are not compensated by the huge benefits of successful residential investing. However, it’s always good to be aware of them so that at least you can make informed decisions about what to do with your capital.

The investment drawbacks of holding residential property directly are:

* The costs of acquisition can be high, typically £2000+

* The minimum capital required is large, with a minimum amount for a deposit, acquisition fees, set up costs of probably £20,000+

* The timescales for buying and selling property is long and the timing uncertain i.e. it takes many weeks and you rely on finding a willing buyer or a property that you want at the right price

* Management time is far greater than non-direct investment

* Generally timescales are long. Residential property is a long-term investment where your capital is tied up and cannot be accessed unless you remortgage

Therefore, as well as considering direct investment are there alternatives and what are their advantages?

There are a number of ways that it is possible to invest indirectly in the residential property market but first, what are the advantages of indirect investment?

1. the size of the investment can be much smaller than direct property investments, rather than thousands it can be hundreds of pounds

2. the investments are much more liquid so it’s easier to put money in and easier to take funds out

3. there are little or no management involvement in the investments

4. the entry and exit costs from the investment are also a lot smaller

Current Opportunities

The strong performance in residential property has led to a number of innovative schemes looking at ways that investors can invest in residential property without having to do it directly.

Stock market

The most obvious way to invest indirectly in residential property is through the stock market. There are a variety of companies whose performance depends to a greater or lesser degree on the residential property market. For instance, there are the numerous quoted house builders which as well as carrying out development, also hold large land banks. The asset value of these companies often varies in line with the underlying value of residential property as land costs generally rise and fall in sympathy with house prices. Another company to consider is Grainger Trust http://www.graingertrust.co.uk . This company is the UK’s largest quoted residential property owner, with over 12,000 homes. As well as owning property they are also active in other related areas such as equity release, asset management and house building. Opening a share dealing account is a lot easier than you might imagine.

Residential trading exchange OPROMARK

A new initiative which may offer an alternative to direct property ownership is a company called Opromark. This company is described as the world’s first exchange for trading fully securitised properties. The way the exchange works is that a residential property is owned by a Single Property Company (SPC). This is then owned by Opromark members. Each SPC is managed by a property professional who acts as the managing director responsible for the management of agents who let the property on the shareholders behalf. Properties are let and the rent is then distributed to the shareholders in the form of a monthly dividend.

The individual shareholders are free to buy and sell shares in each SPC at any time.

This scheme looks as if it could be an interesting alternative to direct property ownership. One of the obvious problems could be the liquidity of the shares, which means that they can only be transacted on a matched bargain basis. This effectively means you can only buy and sell if you can find other shareholders to either buy or sell stock. It is early days and it’s probably worth seeing how the project progresses before committing too many resources to it.

Funds

The Diverse Fund launched by Cordea Savills, the investment arm of the property company Savills Plc offers the opportunity to invest in student halls of residents, residential homes for doctors nurses & housing association properties on long leases. It is a Jersey quoted Oeic (Open ended investment company). It can borrow up to 70% of the value of it’s assets and has a current value of £10 million. Minimum investment is £10,000. The fund aims to capitalise on the growing popularity of student accommodation as an investment asset. The fund has a 5% yield and the projected capital growth in the fund is in excess of 10% per annum between 2006 and 2010.

Sipp (Self Invested Personal Pension)

Great things were promised by the Government for personal pension holders as a result of ‘A-Day’ at the start of the 2006 tax year. This catchy expression was meant to herald in a raft of new ways of investing for your retirement through a SIPP, including the ability to hold residential property in it. Not for the first time the Government failed to deliver. In a dramatic last minute U turn; it removed residential property from the list of qualifying investments. This dashed the hopes of many existing and potential residential investors. However, in the latest twist to the saga the regulations were ‘tweaked’ by the budget to allow the direct holding of residential property in a SIPP but only through a syndicate. The qualifying criteria are quite restrictive in that the syndicate must comprise of 10 or more people and that the properties cannot be used by syndicate members. In addition, the SIPP must be worth £1 million or more and have 3 or more properties. No single property should be worth more than 40% of any individual SIPP.

REITs (Real Estate Investment Trusts)

REITs have been available in the US and Japan for a number of years and are very popular with investors as they provide a transparent way to invest in property but without the difficulties of direct ownership. The attractions of REITs to the investor and property company is that they pay no corporation tax on their rental income. From the 1st Jan 07 UK property companies are free to convert to a REIT. In returns the companies under the regulations have to distribute 90% of their income to investors. This means that yields on the shares are likely to be high compared to other equity investments quoted on the stock market. The other attraction to REITs, which ultimately can invest in residential property as well as commercial property; is that they will be able to be contained within a PEP or ISA. This allows any income and ultimate capital gains if the shares are sold to be received tax free.

In general, it is likely that the number and variety of schemes available for indirect residential investment will increase as institutions and companies continue to explore ways of allowing investors to access this popular and strongly performing asset class. If the US experience is anything to go by, one of the developments could be the emergence of specialist REITs that invest purely in residential property giving small investors a genuine opportunity to invest indirectly in UK residential property without the drawbacks of direct ownership. Watch this space for developments and keep up to date with the latest news through Property Hawk’s news service.

Commercial property funds

As I have already commented on the fact that institutional investment funds have traditionally avoided residential investment but at the same time have long been large investors in commercial property. Commercial property is yet another way of diversifying your investments. It has shown some strong returns in recent years. Investment funds come in a variety of forms including investment trusts, unit trusts and oeic. They provide a mechanism for individual investors to have a share in the capital appreciation and income derived from investing in a range of commercial property.

Financial Advice

If you find all the talk about investment returns and capital boring and confusing. Then, maybe it is time that you sought professional advice. To source a IFA(independent Financial Adviser) try http://www.unbiased.co.uk which is the website for IFA (Independent Financial Advisers).

IFAs are the only advisers that are able to advise and select from the whole range of investment products on the market. They are bound by the Financial Services Rules, which ensures that any product that they recommend should be suited to your personal circumstances.

Categories
Taxes

Holding Investment Real Estate – LLC, Trust, Or Both?

The Issue: How to Hold Property in California?

Countless individuals invest in real estate every day. Some dream of becoming the next real estate mogul, while others simply wish to supplement their salary with additional income. Whatever your motivations, owning investment properties can produce big rewards, but also big problems. This is why it is important to hold title to your property in the most beneficial way. The internet is saturated with various posts and articles touting the most effective techniques to manage your property. It can often be a daunting task weeding through the mass of information in an attempt to discern what advice is reliable and what advice can get you into trouble. Our goal here is to provide a succinct and clear summary of the safest and most important strategies for holding investment property in California. We hope the result will be a valuable starting point in considering the best ways to both protect you as the owner/landlord from liability and also guarantee the best treatment of your assets.

The Risks of Owning Real Estate

As stated above, while property can be a valuable investment, there are also significant risks. One of the biggest risks is lawsuits. From common slip and falls, to environmental contamination, landlords and owners are easily exposed to legal judgments. Landlords have also been successfully sued by victims of crimes — such as robberies, rape, and even murder — that occur on their property on the theory that the landlord provided inadequate security.

Options for Holding Real Estate

Faced with the risk of lawsuits, it is crucial that you do not own investment real property in your own name. (The only real property you should hold in your own name is your primary residence.) Thankfully, there are several ways in which an individual can hold property other than in his/her own name. These include as a corporation, limited partnership, limited liability company (“LLC”), trust, and many others. While there are many options, when it comes to real estate investment, LLCs are the preferred entity by most investors, attorneys and accountants.

For many reasons, few investors hold investment real estate in C corporations. A corporation protects the shareholders from personal liability, but the double taxation of dividends and the inability to have “paper losses” from depreciation flow through to owners make a C corporation inappropriate for real estate investments.

In the past, partnerships and limited partnerships were the entities of choice for real estate investors. Limited partners were protected from personal liability while also being able to take passed through tax losses (subject to IRS rules–you’ll need an accountant or attorney to sort out the issues of at-risk limitations and so on) from the property. However, the biggest downfall with limited partnerships was that someone had to be the general partner and expose himself to unlimited personal liability.

Many small real estate investors also hold property in a trust. While a living trust is important for protecting the owner’s privacy and provides valuable estate planning treatment, the trust provides nothing in the area of protection from liability. However, although a trust provides no liability protection, it should not be overlooked, as it can easily be paired with an LLC.

1. Benefits of a LLC

LLCs appear to be the best of all worlds for holding investment real estate. Unlike limited partnerships, LLCs do not require a general partner who is exposed to liability. Instead, all LLC owners — called members — have complete limited liability protection. LLCs are also superior to C corporations because LLCs avoid the double taxation of corporations, yet retain complete limited liability for all members. Furthermore, LLC’s are rather cheap and easy to form.

A. One LLC or Multiple LLCs?

For owners of multiple properties, the question arises whether to hold all properties under one LLC, or to create a new LLC for each additional property. For several reasons, it is generally advisable to have one LLC for each property.

First, having a separate LLC own each separate property prevents “spillover” liability from one property to another. Suppose you have two properties worth $500,000 and they’re held in the same LLC. If a tenant is injured at property 1, and wins a $750,000 judgment, he will be able to put a lien on both properties for the entire $750,000 even though property 2 had nothing to do with the plaintiff’s injury.

On the other hand, if each property had its own LLC, then the creditor could only put a lien on the property where the plaintiff was injured (assuming that they cannot pierce the corporate veil).

Additionally, many banks and lenders require separate LLCs for each property. They want the property they’re lending against to be “bankruptcy remote”. This means that the lender doesn’t want a problem at a separate property to jeopardize their security interest in the property that they’re lending on.

2. Benefits of a Trust

As stated above, an LLC may be used concurrently with a trust to provide the best protection and estate treatment for your property. There are many types of trusts, but the revocable living trust is probably the most common and useful for holding title to real estate. The major benefit from holding property in a trust is that the property avoids probate after your death. As many are aware, probate is a court-supervised process for transferring assets to the beneficiaries listed in one’s will. The advantages of avoiding probate are numerous. Distribution of property held in a living trust can be much faster than probate, assets in a living trust can be more easily accessible to the beneficiaries of the trust, and the cost of distributing assets held in a living trust is often less than going through probate. [Note: One should also be aware of other ways to avoid probate. For instance, property held in joint tenancy with a right of survivorship automatically avoids probate whether or not the property is in the living trust. Consult an estate planning attorney for more advice regarding probate matters.]

3. Use Both an LLC and a Trust

Because an LLC and a trust both provide significant benefits to the owner of real property, a smart investor should consider using both a LLC and a trust to adequately protect himself and his property. Utilizing both a trust and a LLC creates the best combination of liability protection and favorable estate planning. To accomplish this, the owner should hold the investment property in a single member LLC, with the living trust as the sole member of the LLC. Here, the trust is the owner of the company and holds all of the interests of the LLC. This form of ownership gives you an added layer of protection from the LLC as well as the additional estate planning benefits of a trust.

A. Costs

For the most part, the costs of forming and maintaining an LLC and trust are rather minimal. For an average LLC, the costs are simply nominal filing fees and an $800 per/yr fee to the state of CA. While simple incorporations may be done on your own, it is strongly advised that you seek the advice of a knowledgeable attorney so that no mistakes are made. The same may be said for forming a trust. A little money now is worth the price of avoiding big problems in the future.

B. The CA LLC Fee

While the costs of forming a LLC are generally small, there are additional fees that may be imposed on LLCs in California depending on gross profits. The California Revenue and Taxation Code Section 17942(a) includes an additional fee on LLCs if total gross income (i.e. rent) exceeds $250,000. “Total gross income” refers to gross revenues (not profits). Under this Tax Code Section, the amount of the fee is determined as follows:

1. $0 for LLCs with total gross income of less than $250,000;

2. $900 for LLCs with total gross income of at least $250,000 but less than $500,000;

3. $2,500 for LLCs with total gross income of at least $500,000 but less than $1,000,000;

4. $6,000 for LLCs with total gross income of at least $1,000,000 but less than $5,000,000; and

5. $11,790 for LLCs with total gross income of $5,000,000 or more.

Although the fee is relatively small, one must consider that the fee is assessed against gross revenues, not profits. This means that the fee is due whether or not your property is profitable. For a property with high revenues but narrow profit margins, the fee would reflect a higher portion of the property’s profitability than it would on a property that is highly profitable. For example, a company that owns an office building with revenues from rent totaling $1 million, but a mortgage of $995,000, would actually operate at a loss after the $6,000 fee was imposed. Furthermore, the fee would be particularly irksome for those companies that foresee incurring losses in their early stages of development.

4. Limited Partnership: a Possible Strategy if Gross Receipts Exceed $250,000

For the vast majority of investors, the CA LLC fee should not dissuade you from forming an LLC. If, however, the impact is severely detrimental, there are several potential solutions that may be explored. A competent attorney or accountant may be able to work with you to avoid this fee. One method may be to form a Limited Partnership. The partnership should be set up with an LLC as the General Partner (assuming liability) and the owner(s) of the property as the limited partner(s). By forming a limited partnership with an LLC acting as the general partner, the landlord can likely avoid the higher fee imposed on an LLC while still protecting his/her personal liability. While this may be a possible solution, it is strongly recommended that you consult with an attorney or accountant regarding the best course of action.

While there are risks associated with real estate, with intelligent decision-making and thoughtful preparation, real property can be a valuable investment. The first step though, is to make sure that you have adequately protected yourself and your property. We hope that this article helps property owners begin to discover the various ways in which one may hold investment property, as well as the protections and benefits provided by such ownership.

Categories
Taxes

Mortgage Investment Corporations – MIC Funds

What is a Mortgage Investment Corporation? (MIC)

In a nut shell, a Mortgage Investment Corporation or MIC for short is an investment vehicle (corporation) that enables investors to invest in a diversified pool of real estate mortgages.

Investing in a MIC is similar to investing in a mutual fund in that the investor is investing in a series of mortgages as opposed to investing into a single mortgage. The advantage of this model is that it removes the impact of a single mortgage going bad by spreading the risk over the entire pool.

Investor returns are typically between 8% and 11% and the minimum investment ranges from $5,000 to $10,000.

MICs may be considered more stable than various other money market funds in that it invests in real property (tangible assets) versus other forms of securities which may invest solely on personal or corporate guarantees.

One of the reasons to invest in a MIC is that it is suitable for investors who do not have the time or interest in assuming the administrative responsibilities attached to running a mortgage portfolio. Essentially, the MIC allows investors to share in the benefits of the lucrative and relatively secure mortgage business back by the added security of real estate. Depending on individual circumstances, MIC’s can be an appealing investment to all types of investors. In other words you don’t need to have a high net worth to invest in a MIC.

A MIC is given special designation by Revenue Canada, highlighted in Section 130.1 of the Income Tax Act. To qualify as a Mortgage Investment Corporation for Canadian income tax purposes, the Fund must comply with the following:

  • At least 50% of the Fund’s assets must consist of residentially orientated mortgages and/or cash;
  • The Fund’s only business activity is investing funds of the corporation and not managing or developing any real property;
  • The Fund must not hold any investments secured by real property situated outside Canada or have debts owing to it by non-resident individuals, other than debts secured by real property situated in Canada; and
  • No shareholder may own more than 25% of the issued shares of any class.

MIC investments are able to be held in registered accounts including RRSPs, RRIFs, RDSPs, RESPs, and/or TFSAs.

MIC’s are a slow process of creating wealth. Stocks markets are exciting but many times there is little reason for a stock going up or down. This volatility makes it difficult to plan for the future. Mortgages on the other hand have a fixed rate of interest which is due and payable in a set pattern so you know what’s happening from day to day. MIC’s offer stable and predictable returns in what one might call a “boring” investment. “Boring” but very successful!

Categories
Taxes

Young Farmer Investment Stream – Canada Immigration

Canada Immigration programs are designed to cater to the different needs of immigrants. Whatever your occupation or expectations, you will find an immigration program that best suits and works for you. The Canada Provincial Nominees Scheme business stream is broken into the Provincial Nominee Program for business and Young Farmer Nominee Program.

The PNP for the business makes it possible for the Canadian province to recruit and nominate business people who are qualified from across the world and who have the ability and intent to move to Canada to establish, become partners or purchase a business. The Young Farmer investment stream on the other hand makes it possible for applicants interested in starting a farm or purchasing one in the province of Canada to do so even without meeting the qualifications of PNP stream for the business.

Who is eligible?

Just like any other program, not every young farmer qualifies for this immigration program. To be eligible, you must:

· Have a minimum personal net worth of $150,000 CAD

· Make a minimum equity investment of $150,000 CAD

· Be under 40 years of age if you are the principal applicant

· Demonstrate minimum 3 years farm ownership experience or farm management experience for that matter

· Have marketable skills to supplement farm income; this can be for principal applicant or spouse

· Undertake exploratory visit to the province of Canada to investigate farming opportunities and quality of life there; this visit lasts seven days minimum

· Make the business investment that is eligible in the province

· Have dependents willing to reside in the province

· Be willing to deposit good faith of $75,000 CAD with the province once the nomination is approved; this is refundable without interest once business investment in the application is made

· Demonstrate that farm income and off- farm supplementary income will certainly provide excess of $35,000 CAD per annum after taxes

Self-employed farmer stream

This stream is designed for farm operators and owners who have proven management skills and financial resources to establish sustainable farming businesses in Canada. The applicants need to prove prior managerial experience with existing farming businesses, provide documentation to prove training, education and work experience that is relevant in developing the farming business in their desired province in Canada. They must also have a proposed business plan for the operation and provide evidence of financial investment from a Canadian financial institution for the proposed farming business. An investment of $500,000 CAD equity is also required and the applicant must demonstrate that they can invest more than this amount.

Who does not qualify?

If you are still wondering whether you qualify for the self-employed farmer stream, here is a breakdown of applicants who are not eligible for the immigration program.

· Refugee claimants of those involved in the Federal removal process or appeal because the young farmer nominee program is not allowed to intervene in federal refugee claims, removal or appeal processes.

· Live-in caregivers also do not qualify for the program even if they currently live in Canada

· Temporary foreign workers residing or working in different provinces in the country

· International students in Canada for studies and those in internships or co-op work placements in their study programs.

The young farmer investment stream offers a great opportunity to farmers wishing to spread their wings and test the prospects in Canada. Get more details and try your luck today.

Categories
Taxes

Investment Opportunities in Serviced Accommodation

This type of company is generally a disruptive business. The Ford Model T revolutionized the car industry; Dyson did the same for the vacuum cleaner; Amazon took advantage of the Internet to change the way we purchased books all sorts of other products; and now AirBnB have made it simple to book accommodation not in hotels but in people's homes.

Who does not like to be nosy by looking at how other people live and how their homes reflect their lifestyle and personal taste in home decor and furnishings? It seems therefore that AirBnB really did hit the sweet spot.

While most people will have stayed in a hotel at sometime in their life, they now accept that there are alternative accommodations. The term "serviced accommodation" relates to property that delivers somewhere to eat and sleep but in a property that offers the much more than a conventional hotel by including a fully fitted kitchen, a lounge area in which to relax and additional bedrooms for the rest of the family all within one property that will offer a "home from home" experience.

They have raised the bar so this type of accommodation is now what most people when traveling for both business and pleasure want to stay in. They want somewhere that is flexible so they can stay for a night, or longer; and where they can enjoy spacious accommodation, home comforts, the opportunity to cook a meal to save the cost of eating out at a restaurant; the chance to catch up on their washing and above all, the opportunity to share their experiences with the host, as and when they are resident.

The other contributor to the success of serviced accommodation has been technology. Without this it would not have been possible for the model to gain traction and therefore attract hosts to register their properties, at the speed they have.

Guests have benefited too by having the power and speed to locate properties at the click of a button, possibly for booking on demand; having a friendly person to communicate with throughout the booking process; and having peace of mind, knowing that previous guests have written reviews to say how wonderful the host and property was.

It seems that now travelers have experienced AirBnB, and other online travel websites, as leisure guests they are now insisting that their employers allow them to use the same option for their business travel.

This market is therefore expanding at rapid rate. Research suggests that there are now about 750,000 serviced apartments worldwide – an increase of 80% in just 8 years. In the UK, serviced accommodation supply is expected to grow by 8% in the two years leading up to 2017, outstripping the growth of hotels at 6% according to research performed by Savills, the estate agent.

While supply has increase so has demand. It seems that over 36 million overseas visitors came to Britain in 2015 – an increase of 50% over the previous 12 years. The number of UK residents taking a holiday at home is also on the increase especially as the exchange rate between sterling and both the dollar and euro has depreciated following the referendum vote to leave the EU. This would suggest a long term boom for the British tourism industry and an unprecedented demand for overnight accommodation.

The location and the facilities on offer are the two major contributors to higher occupancy levels. If a property is situated close to good transport links, major companies and popular tourist attractions; as well as being well furnished and fitted it to a high standard it will be popular with guests and therefore be in demand.

Obviously, nobody is forecasting the imminent demise of the hotel industry or the private rental accommodation sector as a whole because they are both substantial but anybody with an eye for a property investment with a generous long-term fixed yield income could do a lot worse than investigate this emerging property investment sector.

Private individuals have often invested in HMO multi-let properties to secure a higher rate of return but recent UK tax changes have made this proposition less attractive.

Now that the serviced accommodation sector is growing at such a rapid rate, there are greater opportunities to realize a higher rental income on these compared to HMO's. One just needs to be certain that demand and therefore occupancy levels are sufficiently high to provide the margin required to deliver a healthier rate of return than one achieves when leaving money in bank savings accounts.

Categories
Taxes

Florida Investment Real Estate and What Are Considerations Before Buying

Investment Real Estate, First Things First

Considering investing in property? What are some pertinent things to consider before taking this leap? Of all the investment possibilities, investment in land generally produces the most positive results. It is vital, however, to carefully investigate the pros and cons, benefits and deficits of real estate investment. Most people look at investment real estate as risky and feel woefully inadequate to tackle this form of investing. They feel lost, not knowing where to even begin!

A multitude of information is available and knowing how to search can seem daunting. A web site search will produce boatloads of information, some valuable and some not. Some key words to search are real estate investment, investment property, and investing in real estate. This will begin the process for you. Not all available information is worth your time, however. Beware when the site promises high return for little down. Also beware of sites whose main goal is to solicit your money. Web searching is one form of research. Another is talking to a reputable real estate broker or real estate lawyer. One of the best sources of information is a friend you trust who has done real estate investing. A trustworthy friend who started as a novice and progressed to real investing is probably your best source of reliable information. Their voice of experience rings the loudest since they are a layman like you who had to discover for themselves each step of the way how to make successful investments.

Investment Real Estate, Rental Units

Let’s look at some sound reasons for investing in real estate. Real estate generally appreciates at a greater rate than the rate of inflation and offers great tax benefits. Selecting real estate in a desirable location will prove to be profitable especially in burgeoning areas, usually in suburbs which are a reasonable commute to city jobs. Of course the old adage, location, location, location is a very pertinent piece of advice to take to heart. Think of the most expensive housing markets today. If you have lived in an expensive housing market, or have visited there, you will notice that along with exquisite homes offered for sale at exorbitant rates, small, older homes you would never consider buying in another market are being offered for huge dollars. Why? Location, of course. When a housing area becomes desirable, even those small dumpy homes will sell for a considerable amount of money. Let’s stop for a moment and look at the advantages of investing in rental units as opposed to purchasing property for resale. One of the largest factors to consider in purchasing property for resale is finding properties that will resell at a higher rate than purchase, of course. Finding these properties is not as easy today as it may have been in the past. It used to be that fixer-uppers and foreclosures were avoided by homeowners and investors alike. Not so today, those same homes are being feverishly snatched up in the current booming housing markets.

Florida Investment Real Estate – Why Florida Is a Good Choice

Finding homes to purchase and turn over quickly for cash is becoming more and more difficult, leading many to consider purchasing property for the purpose of renting. What are some advantages to renting and what locations would be most desirable for purchase with a rental goal in mind? Owning rental property provides some unique advantages. If you have the time as well as the finances to invest, rental property could end up paying for itself in the long term. In order for this to be true, the most important thing to search for is property in a great location for renters. You don’t want to be searching for renters for months on end while you are being drained of capital. Those mortgage payments never stop, even when the list of renters has been exhausted. Buying rental investment property in a college town is a good bet for the possibility of continual renters and also buying in transient areas and tourist areas. Of all the above, tourist areas tend to be your surest source of consistent renters. Numerous high density tourist areas exist across the nation, but one of your best bets for purchase and consistent renters would be a sun-drenched spot with a year-round temperate climate. California and Texas would fit the bill, but as we all know, the most desirable locations in California may be out of reach due to the high cost. Texas may be considered a good choice, but only one state ranks as the premier tourist destination in the world and that would be Florida, the sunshine state.

Florida Investment Real Estate – The Orlando Area

With Florida’s burgeoning population, Florida investment real estate is a great option. Florida ranks 4th in population behind California, Texas and New York. Florida has one of the fastest rates of growth in the nation, making Florida investment real estate a very attractive option for investors. In the 1990’s, Florida grew by 23.5 percent with five counties increasing by more than 60 percent. Projected state growth would bring the population to over 19 million by 2010. An increasingly higher population obviously increases the need for housing. The increasing resident population being a great reason to pursue Florida investment real estate; let’s not neglect another face of increasing housing need. Florida has a tourism rate of almost 77 million visitors in 2004, making it the top travel destination in the world and producing $57 billion of income. Tourists flock to all parts of Florida, the beaches being one of the most attractive destinations. However, Orlando pulls in the most visitors, with 2.6 million international travelers, not including the steady stream of domestic tourists. This alone would offer sufficient reason to purchase rental property. But considering that the grand total of tourists visiting Orlando in 2004 was 48 million people, what great housing investment potential for investors! The biggest drawing card in the Orlando area is, of course, Walt Disney World. The area surrounding Disney has a hotel rate occupancy of about 80 percent. It’s obvious why the Orlando area is considered one of the most desirable tourist destinations in the world.

Florida Investment Real Estate – What are Reasons Tourists Come to the Orlando Area

Owning Florida investment real estate will give vacationers who visit the Orlando area a place to stay while you collect the rent. Theme park attractions are one of the biggest reasons Orlando has become a #1 tourist destination. The three most popular are Disney, which includes Disney World, Epcot, Animal Kingdom and MGM Studios, Sea World and Universal. Each attraction holds an appeal for people of all ages with families and singles alike enjoying each. Kissimmee is the town closest to Disney where families especially enjoy a few of the more laid back sights including Green Meadows Farm. Green Meadows is in an idyllic country setting with tours of the farm and more than 300 farm animals to touch and see. Also in the Kissimmee area is Horse World Riding Stables. The 750 acres of open pasture beckons horse lovers to enjoy a ride beneath the open sky. The Orlando Science Center beckons science buffs both young and old. Learning happens as a by-product here through the realistic, interactive and just plain fun exhibits. Fabulous night life is to be found both in Kissimmee which boasts two very popular dinner attractions, Medieval Times and Arabian Nights. Both serve delectable large portions of food with fabulous jousting and medieval type entertainment. For the shopper, Shopping and dining abound in the Orlando area also as do all sorts of natural environmental experiences.

Real Estate Investment in Florida – Bimini Bay Resort Florida

A well-kept secret but one located just 5 miles from Disney, in the center of Florida is Davenport, a treasure of a town close to the major attractions, yet a world away. On 80 acres of land in the Davenport area, you will find Bimini Bay Resort, Florida. A grand investment opportunity awaits you at Bimini Bay Resort, Florida where the investor participates in property appreciation but is not affected by negative cash flow during the off season. At Bimini Bay Resort, Florida you will find a planned community of luxurious town homes, offering 3 bedroom two baths that are fully furnished and equipped. Bimini Bay Resort, Florida is unique in that the investor can stay in the purchased unit while on vacation for a minimum fee while renting the unit the rest of the year. Management staff at Bimini Bay Resort finds the renters while you enjoy a guaranteed rental income each month. Planned amenities at Bimini Bay Resort include two major restaurants, a grocery, deli and food court and a sports bar restaurant. Bimini Bay Resort will also include a spa and exercise facility. A large business conference center and twin theaters are also planned at Bimini Bay Resort. Peace of mind will be yours at Bimini Bay Resort with its gated access with security cards. A fantastic real estate investment in Florida at Bimini Bay Resort awaits the investor who desires a consistent income without the headaches of day-to-day management. Bimini Bay Resort is worth investigating.

Our Featured Orlando Properties: You have an opportunity to join one of the fastest growing trends in the United States and the world. Orlando is one of the most explosive markets in the country and the Disney resort area has an average hotel occupancy of around 80%. Orlando is known as the vacation capital of the world and the top rated short term rental market, one that shows tremendous potential for real investors.

Tourism – with 76.8 million visitors in 2004 (a record number), Florida is the top travel destination in the world. The tourism industry has an economic impact of $57 billion on Florida’s economy. Click here for additional tourism facts and statistics.

City Population Rank (2000):

(Rounded to the Nearest Thousand)

1. Jacksonville – 736,000

2. Miami – 362,000

3. Tampa – 303,000

4. St. Petersburg – 248,000

5. Hialeah – 226,000

6. Orlando – 186,000

7. Ft. Lauderdale – 152,000

8. Tallahassee – 151,000

9. Hollywood – 139,000

10. Pembroke Pines – 137,000

11. Coral Springs – 118,000

12. Clearwater – 109,000

13. Cape Coral – 102,000

14. Gainesville – 95,000

15. Port St. Lucie – 89,000

16. Miami Beach – 88,000

17. Sunrise – 86,000

18. Plantation – 83,000

19. West Palm Beach – 82,000

20. Palm Bay – 79,000

21. Lakeland – 78,000

22. Pompano Beach – 78,000

23. Davie – 76,000

24. Boca Raton – 75,000

25. Miramar – 73,000

Most Populous Metro Areas (2000):

(Rounded to the Nearest Thousand)

1. Tampa/St. Petersburg/Clearwater – 2,396,000

2. Miami – 2,253,000

3. Orlando – 1,645,000

4. Ft. Lauderdale – 1,623,000

5. Jacksonville – 1,100,000

6. West Palm Beach/Boca Raton – 1,131,000

7. Sarasota/Bradenton – 590,000

8. Daytona Beach – 493,000

9. Lakeland/Winter Haven – 484,000

10. Melbourne/Titusville/Palm Bay – 476,000

11. Fort Myers/Cape Coral – 441,000

12. Pensacola – 412,000

13. Fort Pierce/Port St. Lucie – 319,000

14. Tallahassee – 285,000

15. Ocala – 259,000

16. Naples – 251,000

17. Gainesville – 218,000

18. Fort Walton Beach – 170,000

19. Panama City – 148,000

Home to 11 of the country’s 100 fastest-growing counties, a Florida investment property has high potential as a profit-maker, unlike most other areas. Port St. Lucie, Miramar and Cape Coral are the fastest growing cities in Florida. It’s unlikely you will make a mistake investing in Florida real estate considering the vast number of tourists and new residents flocking to the land of sun and surf. The most difficult decision to make will be which location in Florida to purchase. Good investments abound in each area of the state, from Miami in the south to Clearwater on the gulf coast, going east to Daytona Beach and north to the panhandle. Selecting a location depends on your goals for purchasing Florida investment property. Carefully consider what you intend to do with your Florida investment property. Will your purchase be used mainly as a rental property for vacationers? Do you intend to have access to the property during certain seasons? Or is your goal rental of the property to local tenants? Some of these questions will help you in narrowing down your search. Once you have determined whether your Florida investment property will be used primarily for vacationers or for local renters, and whether you intend on using it as a vacation resort yourself, it is easier to choose the location.

“Each year is better than the previous one,” said Abe Pizam, dean of the University of Central Florida’s hospitality management college. “But it’s not yet where it should be, or where it was.”

Pizam said that, while a weak dollar has helped renew interest in Orlando among some foreign visitors, many are continuing to stay away because of heightened security measures in the United States and the hassles that accompany them, as well as increased opposition to the war in Iraq.

“It’s a miracle that, despite that, we have improved our visitor counts,” Pizam said. “We cannot deny there is still animosity toward the United States in many parts of the world.”

Struggling economies in South America also put the brakes on many potential tourists’ travel plans in what historically has been a strong market for Orlando.

According to the bureau’s figures, the number of South American visitors have dropped substantially in recent years, from 659,000 in 2000 to fewer than 300,000 last year.

Other signs point to a recent upswing in international traffic, however. Orlando International Airport officials said in June that the airport recorded a 20 percent increase in international passengers compared with the same month last year.

On International Drive, a tourism corridor that benefits heavily from overseas travelers, merchants are noticing the difference.

“It’s maybe picked up,” said Zach Marino, manager of Texas de Brazil restaurant on International Drive. “In this area it’s hard to tell because this is the spot to be. We have a strong international clientele.”

Asian visitors increased by nearly 40,000 in 2004, and about 100,000 more Canadians traveled to Orlando last year than in 2003.

The visitors bureau noted that it has stepped up its national and international marketing of Orlando, having pulled back on such advertisements after 9-11.

“Our plan is more back-to-normal in terms of marketing thrust,” Peeper said.

New York remained the No. 1 source of domestic out-of-state vacationers to Orlando last year. The Tampa Bay area held on as the top source of in-state visitors.

Experts are predicting that 2005 will exceed last year in terms of both international and domestic visitors.

Earlier this month, Walt Disney World reported percentage growth in the low double digits among international tourists, while the number of domestic customers remained relatively flat during one of the rainiest Junes on record.

“If everything stays stable, we should come out on the international side real well” in 2005, Peeper said.

Categories
Taxes

Offshore Investment – The Ideal Way for Saving Your Wealth

What Is Offshore Investment?

Offshore investment refers to a wide variety of investment strategies that take advantage of tax benefits offered outside of an investor’s home country.

There is no scarcity of money-marketplace, bond and equity assets offered by trustworthy offshore investment companies that are fiscally sound, time-tested and, most importantly, legal.

What Is Offshore?

Offshore explains the repositioning by an entity of a trade process from one countryside to another, typically an operational process, such as manufacturing, or supporting processes. Even state governments make use of offshore investment. More recently, off shoring has been associated primarily with the sourcing of technical and administrative services supporting domestic and global operations from outside the home country, by means of internal (captive) or external (outsourcing) delivery models.

“Offshore ” is usually to portray a country where there are also no taxes or low taxes for foreign persons either individual or commercial.

It is a truth that offshore investment havens have crafted a unique legally recognized and tax free climate for overseas individuals and businesses. They offer specifically to them. More than half the world’s assets exist in such asset havens.

Monetary privacy, a steady legal environment and realistic rulings are the trademark of these jurisdictions.

When we converse about offshore investment financial companies, the term invokes up an image of enormous, shadowy monetary monoliths, investing funds without any transparency.

Advantages

There are many reasons why people like investments in offshore:

1. Tax Reduction

Many nations, recognized as tax havens, offer tax inducements to overseas investors through an offshore investment. The positive tax rates in an offshore investment possible country are intended to encourage a vigorous offshore investment atmosphere that magnetizes outside wealth. For tiny countries like Mauritius and Seychelles, with only a few reserves and a small population, offshore depositors dramatically increased their economic activity.

Offshore investment occurs when offshore depositors outline a company in an overseas country. The corporation acts as a shield for the investors’ financial credits, shielding them from the higher tax load that would be acquired in their home nation.

Because the corporation does not engage in local operations, little or no tax is enforced on the offshore investment company. Many overseas companies also benefit from tax-exempt category when they put in in U.S. markets. As such, making ventures through overseas corporations can clutch a distinct benefit over making investments as an individual.

2. Confidentiality

Numerous offshore investment jurisdictions have confidentiality legislation which creates it is an unlawful offense for any worker of the financial services commerce to disclose possession or other information about their clients or their dealings.

But in the examples where unlawful proceedings can be proved, identities are being disclosed. Thus the Know Your Client due diligence documents are becoming just more complex.

Disadvantages

The main drawbacks are those of costs along with ease.

Many investors like to be capable to meet up and speak to the person setting up their incorporation of offshore investment companies and traveling to the tax haven costs funds.

In a number of nations you are taxed on your universal revenue, so not disclosing offshore investment returns is illegal. In other countries having offshore accounts are unlawful for individuals but authorizations can be obtained from companies.

Several banks in offshore jurisdictions need smallest amount in investments of US$ 100,000 and higher, or to possess assets locally.

The kinds of offshore investment companies usually existing are:

  • Trusts
  • Resident Offshore Company
  • International Business Company
  • Protected Cell Company

These types of companies also exist.

E.g.: Many mutual funds and hedge funds whose investors favor ‘ off shore country’ ventures.

But for average financiers like us too can form offshore companies of relatively small size to fulfill our most everyday needs. Or we can put in, via our off shore investment expert, into offshore companies to own investments in special funds.

There are various uses:

  • Trading Companies
  • Professional Services Companies
  • Shipping Companies
  • Investment Companies
  • Intellectual Property & Royalty Companies
  • Property Owning Companies
  • Asset Protection Companies
  • Holding Companies
  • Dot Com Companies
  • Employment Companies

Trading Companies

Import/Export and general trading company’s activities are also compatible with the structure of offshore investment companies. The offshore investment company acquires orders from the supplier and has the goods distributed directly to the customer.

It does the invoicing to the customer and saves the difference in a tax free country. E.g. Products from China to Kenya could be invoiced by a Seychelles or RAK offshore incorporation and the revenues retained there.

Individuals utilize offshore investment companies to acquire mutual funds, shares, property, bonds, jewelry and precious metals. Sometimes they will also apply these companies to trade in currency, equities and or bonds. The wealthy will also have diversified offshore investment companies for different division of possessions; for different countries or by different categories of investments.

The diversification evades the risk. But also in cases where capital increases taxes are levied, e.g. in property or equity, sometimes it is cheaper to sell the company rather than the individual asset itself.

Professional Services Companies

Individuals, e.g. counselors, IT experts, engineers, designers, writers and performers working outside their local country can gain momentously from using an offshore investment business. The offshore investment business demonstrates the individual as a company worker and gets a fee for the services rendered by the ’employee’ [possessor]. This fee is received and saved tax free. The person can then receive the imbursement as he or she hopes to minimize their taxes.

Shipping Companies

The utilization of offshore investment companies to possess or license commercial ships and pleasure craft is very familiar internationally. Shipping companies mount up earnings in tax liberated offshore jurisdictions and, if every ship is placed in a separate offshore investment company, it can get hold of considerable asset security by isolating liabilities of each individual craft.

Investment Companies

Individuals make use of offshore venture companies to then buy mutual funds, shares, bonds, property, jewelry and expensive metals. Sometimes they will also use these companies to operate in currencies, equities and or bonds either via the internet or through managed funds run by banks and financial institutions. The wealthy will also have diversified offshore investment companies for dissimilar class of assets; for different countries or by different varieties of investments.

The diversification evades the threat. But also in cases where assets gain taxes are levied, e.g. in goods or equity, sometimes it is economical to sell the company rather than the individual asset itself.

Intellectual Property & Royalty Companies

Offshore investment companies are being seen as vehicles to own Intellectual Property and royalties received for software, technology rights, music, literature, patents, trademarks and copyrights, franchising, and brands. These companies are in the type of trusts or foundations.

Property Owning Companies

Owning property in an offshore investment company saves you the funds gains taxes that may be levied at the occasion of the property’s deal, which are avoided by selling the business instead of the property. Other significant benefits are the authorized prevention of inheritance and other transfer taxes.

Mainly, in some countries, e.g. Islamic ones, inheritance is via Shariah regulation and not your determination. So an offshore possession will make sure that the assets owned outside the country need not be distributed according to Shariah Law.

Asset Protection Companies

It is estimated that a professional in the US can be expected to be sued every 3 years! And that more than 90% of the worlds lawsuits are filed in the US.

Amazing statistics!

If you have an income or assets of more than US$ 100,000, you should seriously consider offshore investment companies!

Most offshore jurisdictions require that for a lawsuit, a lawyer must be hired and paid up front before a suit can be filed, thus keeping frivolous lawsuits away. Often a substantial bank bond has to be placed by the government, to even implement a lawsuit. It can also (take years of waiting) to get into court in some offshore investment jurisdictions.

If you have substantial liquid assets you should consider a Trust which would own the offshore company. This will provide a greater degree of protection, at the least expense.

However, we should remember that this structure is for asset protection, not for tax savings and so that the focus should be maintained.

Holding Companies

Offshore investment companies can also be used to own and fund operating companies in different countries. They could also be joint venture partners or the ‘promoter’ of publicly quoted companies. Mauritius is well suited as a country for investing companies because of its favorable double tax treaties.

Dot Com Companies

The internet has made the cost of business entry very low and consequently the legal protection of the company’s assets, both physical and intellectual, that much easier. Dot Com companies now use this flexibility to develop different software projects in different offshore investment companies to invite different investors and to keep the flexibility of raising funds separately for different projects depending on the project’s success. Both Mauritius and Seychelles have Protected Cell Company [PCC] structures available for just this kind of need.

Then there is the possibility of receiving your funds earned on the web into an offshore company’s bank account. Would that be of interest to you?

Employment Companies

Multinational companies use offshore investment companies to employ expatriate staff who are deployed in different tax jurisdictions around the world. To facilitate transfers, reduce the employee’s taxes and administer benefits easily an offshore company employment is preferred. Working on assignments throughout the world.

Categories
Taxes

The Best Tax Free Investment

Simply explained if you sell your home that you are living in or have lived in then the whole or part of the gain is exempt from tax. Please be reminded that irrespective of occupation the final 36 months of ownership qualify for relief.

Special provisions apply if you own two residences and if you have had periods of time when you were not in occupation.

As soon as a second property has been purchased an election should be made for it to be the principal private residence, the final 36 month period being exploited in respect of the original property in the meantime.

Relief will be available for both properties for the three year period.

Each property must be a residence so that ownership is not sufficient.

What is a dwelling house?

Not only bricks and mortar but carefully handled caravans and houseboats can qualify; basically the usual services water, electricity and telephone would need to be installed and the facts would need to support a degree of permanence and occupation as a dwelling.

The previous use of a building/structure does not affect the position as long as with caravans/boats the facts support the use as a permanent residence. Other types of converted building that would qualify would be warehouses, barns, windmills, churches, lighthouses and many others.

There is some interesting case law on what is covered by the exemption where there is a dwelling house with more than one building. Basically, the cases indicate that in reaching a decision as to which buildings are exempt you need to consider: are the small buildings secondary to a larger or main building?

Are the small buildings occupied by staff for the main house, or were they at least built for such occupation? Can it be said that they are too far away from the main house to be regarded as one unit?

The most important aspect is probably, whether overall the small buildings can be regarded as part “of the entity which, in fact, constitutes the residence of the taxpayer”, and, are they within the curtilage of, and appurtenant to, the main dwelling house?

Garden or grounds?

Not only is the profit from the building exempt but so is the land on which it stands. The maximum being 0.5 of a hectare; but it must be for your own occupation and enjoyment.

So can there be any exception?

Yes, where you can show that the greater area was required for the reasonable enjoyment of your residence having regard to the size and character of the house. There are several decided cases that will make the definition clearer.

How long do I need to live there?

Lord Justice Widgery explained…”Some assumption of permanence, some degree of continuity, some expectation of continuity, is a vital factor that turns simple occupation into residence”.

Sale of plot

The sale of your home is tax free if it has been your only residence. The plot including the site of the house is exempt if it does not exceed 0.5 hectares. This area can be exceeded in certain defined circumstances.

That said if you sell the house with some land and retain a “plot” which is subsequently sold; the exemption does not extend to the sale of the “plot” as it is no longer your main residence at the time the “plot” is sold.

If you get planning permission and intend to develop yourself I suggest you sell the land into a company in order to shelter the development profit at the corporation tax rate rather than at the higher rates.

The statute prohibits relief where the dwelling house was specifically purchased with the object of making a gain which would be tax free.

You could buy a house with up to 0.5 hectares of land or land on which you could build a house and later sell with the benefit of planning for another house or houses. Do not get planning permission as this indicates your future intention.

Only go for planning at the time the property is to be sold; you will need a reason for sale to show you did not have the profit from the development in mind when you purchased the property originally.

Private residence which has been let

When a property is sold which has been your only or main residence, there is an exemption available to recognise the capital gain caused by any residential letting. If the property had been let in whole or in part at any time during your ownership, tax is chargeable but relief is at hand.

Statute exempts the gain chargeable by reason of the residential letting by a further amount. The total amount of relief from tax is the exempt amount due to the period of residence and deemed residence and a further amount which is equal to the lesser of (a) the exemption due, and (b) £40,000.

The relief applies to an individual with the result that it would seem that the relief applies to you/ your husband or wife/civil partner.

Private Residence – Two Properties

Where you own two properties it is important to consider carefully which property should be the main residence and an election made accordingly.

Your main residence could well be a property in the country which does not have the same capital appreciation as a flat in London which is used as a pied-a-tare. Both being used as residences it would be wise to elect for the “greater gain” to be exempt i.e. the London flat.

This election must be made within two years of the acquisition of your second home and you can vary it at any time in favour of another property.

This could be for as little as one week. It will enable you to have three years exempt, at least, being the final three years. If you are too late to elect you could buy a third property to facilitate a timeous election. Plan carefully and act with good professional advice.

Children

When your children go to work away or to University they should have their own property even if you are called upon to stand as guarantee.

Purchase the property in your child’s name and then they can receive the rent if they let out rooms to their friends, which should offset a high proportion of the mortgage repayments. Also consider whether rent a room relief is due.

Settlement residence: exemption

Where trustees dispose of a dwelling house or part of a dwelling house which has been occupied by a beneficiary under the terms of a settlement the provisions that relieve a private residence apply.

I hope that this has helped you not only to understand the statutory provisions but show you that everybody should make multiple tax free capital gains during their lifetime.