Real estate investment in London, or at any rate in England, is more advantageous if, in some cases, it is made through an SPV (special purpouse vehicle).

The initial condition of analysis concerns a taxpayer tax resident in Italy.

Let us now see what the tax aspects are:

– the proceeds are taxed at 19 %, i.e. the ordinary Corporation Tax rate is applied.

– the real estate owned by the company is not subject to I.V.I.E, Foreign Real Estate Value Tax.

– if the property is resold and a capital gain is generated, the tax that will be applied is the ordinary corporation tax rate and not the 28 % capital gain rate.

– by opting for the use of leverage, interest expenses arising from the loan can be deducted at the rate of 20 % as a tax credit.

– if the shareholders decide to distribute dividends from the vehicle, which will be taxed in Italy at 26 % if the receiving shareholder is a natural person. If, on the other hand, the shareholder-recipient is a legal person resident in Italy for tax purposes, it bears a 5 % tax.

– all travel expenses to and from London as well as all stays incurred by the director(s) are fully deductible in the tax year.

– all costs incurred by the company closely connected with the ownership of the property are fully deductible in the tax year.

– the property is owned by the incorporated legal entity without any intrinsic or joint connection of the shareholders.

Next we will discuss the use of leverage to make the real estate investment in London .all information regarding the incorporation of legal vehicles can be found at : http://www.gov.uk/government/organisations/companies-house