Mark Alexander – Founder of Property118, has published an article asking why a landlords business is not treated the same as any other business.
It can be seen here, and says:
property rental businesses, especially privately owned ones, have a much tougher deal when it comes to tax.
For example: –
- Private car rental business owners can offset 100% of finance costs against rental income but private rental property business owners cannot
- Private car rental business owners can sell their business and roll 100% of the sale proceeds into almost any other form of business to defer capital gains tax, but private rental property business owners cannot. Instead, private rental property business owners must first pay Capital Gains Tax and can then only invest whatever is left over.
- Private car rental business owners can gift their business to the next generation without taxation consequences before or after death, but rental property business owners cannot. Instead they have to pay Capital Gains Tax if they do this whilst they are still alive and Inheritance Tax after they have died. If they gift their business and then die within three years they could actually end up paying both the full amount of Capital Gains Tax AND Inheritance Tax.
The only reason I used a car rental business as a basis for the comparison to privately owned property rental business is that they are both rental businesses. However, the rules applied to car rental businesses also apply to every other form of business other than rental property. How unfair is that?