PATRICK MURDOCK (MRICS ATT)

Patrick is a Partner and the head consultant of Capsure Tax. A former director of the capital allowances team at Sweett Group and a Member of the RICS, Patrick provides industry leading experience and expertise.

SUZANNE MURDOCK

Suzanne is the company Administrator and is instrumental in the organization and running of the company.

WHAT WE DO

Capital Allowance specialists helping our clients optimise tax relief on capital expenditure.

Different people may have different motives for investing in capital expenditure projects. The motives may differ according to the country where the investment will take place. One important aspect in any investment is the profit motive.

One would expect to make a profit comparable with any alternative investment open to him. Because of the characteristics of real property, the size of the investment and the uniqueness of each property, the motives and objectives of investors will depend on personal desires as well.

People tend to invest in real property for two reasons: one is based on justifiable economic analysis and the other is based on subconscious desires and psychological and emotional reactions.

Tax consideration will feature more in the first reason. For example, someone may decide to invest in a property in a country where the interest (or part of it) payable under a mortgage to purchase the property will be set off against the income from the property or against his employment income, still available in a few countries.

In the UK mortgage interest in respect of an owner-occupied residential property can no longer be set off against an occupier’s income. In the case of rental income from properties, finance costs for the purchase is deductible against rental income.

However, for residential properties which are rented, the relief granted will be tapered over a few years. From 2020-21 all financing costs incurred by a landlord will be given as a basic rate tax reduction.

The reason for the restriction to basis rate tax deduction is to make the system fairer as claimed by the government. It will ensure that landlords with higher incomes are no longer entitled to the most generous tax treatment. In order to give them time to adjust to the new regime, the change is being introduced gradually from April 2017 over a four-year period.

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