REIT tax problems highlighted

People investing in property can face an unnecessarily large tax burden, an update from industry groups has revealed.

KPMG, the accountancy and financial services firm, has released a guide on the matter in collaboration with education group Reita.

The advice centres on the various ways people can take out Real Estate Investment Trusts (REITs).

It highlights the fact that the tax burden can be as high as 46p in the pound - assuming the investor is a higher-rate taxpayer and is investing in a property company directly rather than through a trust.

However, Reita and KPMG pointed out that tax is zero if the investment is through a REIT and put in a tax-free wrapper, such as an ISA.

Philip Fry, Reita programme director, added: ’The taxation of property investments can be very complex as there are so many routes to access property as an asset class.

’Particularly as we are now beginning to see some signs of upturn in the UK commercial property market, it is vital that the taxation issues are understood by investors before they make any important investment decisions.’ADNFCR-2318-ID-19128515-ADNFCR