Property Based Investment Flashcards
Discribe listed property company?
A company that invests in property and investors buy shares of the portfolio of these assets.
Price decided by supply and demand, which is affected by other factors, including performance of the fund manager.
Company pays tax on income and gains.
Can gear-up
Movements of shares in listed companies usually slower that the property market.
How are property units trust and investment trusts different from normal ones
Pretty much work the same. Redemption can be delayed up to 6 months to sell property but is usually made up from more money coming into the fund.
What are property authorised investment funds?
OEIC funds that invest in property (but not only.)
Tax on the property within these is passed straight to the investor. 20% net before addition and deductions in the normal way.
Income and dividends are paid out gross.
What conditions need to be met to qualify as a paif?
In the accounting period, 60% of net income must come from the exempt part. (Property)
At least 60% must come from the property investment business.
No corporate investor can hold 10% or more of the NAV
What is a Real estate investment trust (riet)?
Similar to investment companies. Closed ended companies that invest in property.
What are the rules of a riet?
Uk resident
Closed ended
Listed in a recognised stock exchange
What is the structure of a riet?
2 parts
Property letting business that is ring fenced (Exempt corporation tax) besides on sale of property developments.
Part 2 is not ring fenced and is any other operation or activity of the riet this pays Corp tax on gains and profits.
What are the rules to qualify as a riet?
75% gross profits and 75% total assets at the start of the accounting year must come from letting property.
How does taxation work inside the riet?
90% rental profits from tax empty part must be paid as dividends within 12 months.
Property developed not for rent but for sale not exempt unless after 3 years from development.
How does taxation work on the investor of a riet?
Payment from tax exempt pot paid 20% net or gross if in a SIPP or ISA.
Taxed normal way
Payment from non-exempt pot is classed as a dividend and taxed accordingly
CGT on gain at sale
Discribe insurance company property funds
Work as unit linked insurance companies, but underlying assets are commercial property - making investment more liquid than direct property investment.
No gearing
Single or regular premium contract available fund pays tax at 20%
Fund fluctuates in value based on value of underlying property.
