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Where Taxpayers and Advisers Meet

using a property management company to reduce personal profits

yoda999
Posts:5
Joined:Wed Oct 21, 2020 5:46 pm
using a property management company to reduce personal profits

Postby yoda999 » Wed Oct 21, 2020 6:00 pm

Hi I own properties personally and have properties also owned by a company.

Can I use the company that owns rental properties as a property management company and charge management fees to personally held properties?

I believe that this is common but Inland Revenue may challenge arrangements. It is more robust if you also manage 3rd party properties but I do not wish to become a letting agent with associated costs and requirements of doing so.

Any advice on this to ensure that management fees can be charged or is it best to avoid this?

Thanks.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: using a property management company to reduce personal profits

Postby bd6759 » Tue Oct 27, 2020 10:21 pm

You can’t just charge a management fee. The company must provide some service. What services do you think the company will provide?

yoda999
Posts:5
Joined:Wed Oct 21, 2020 5:46 pm

Re: using a property management company to reduce personal profits

Postby yoda999 » Tue Oct 27, 2020 11:24 pm

same services as a letting agent - sourcing tenants, drafting leases, organising repairs and maintenance, ensuring compliance is done when due etc

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: using a property management company to reduce personal profits

Postby bd6759 » Wed Oct 28, 2020 9:23 am

As long as the company charges a market rate it should be OK.

Note that this will be trading income rather than property income for the purposes of the accounts an tax returns.


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