The comment made in the budget was “Many investors hold property through LAQCs. After a short period of consultation, legislation will be proposed so that from 1 April 2011 all LAQCs will be taxed as limited partnerships”
Prior to the Budget there was some speculation, that LAQCs would be dropped and that property losses would be ring – fenced in the vehicle making the investment.
Although the proposed loss ring fencing rules are not comprehensive, the new rules do limit the amount of losses that can be passed from and LAQC to the shareholder. These losses will be limited to the amount the shareholder has invested in the LAQC – very similar to Ltd Partnerships. The new rules mean that where investors want to be able to access the losses at their own personal tax rates by passing through the losses, they must also pay tax on the income in the good years at their personal rates.
Investors in properties, may need to look at whether an LAQC is the best investment for the future.
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