So how does property crowdfunding finance work, first of all? We can use Property Partner as an example.
Property crowdfunding is a form of indirect property investment. This consists of the investment in shares of a company that owns, develops and manages property on behalf of its shareholders. Investors will hold legal shares in the company that owns a specific property. For each investment, an SPV company is created. Information on the special purchase vehicle (“SPV”) that holds the property can be found on the companies house website. Please type the SPV name into the search box on their site to find out more details.
Each property is held for a fixed term which is specified on each investment page. The investor hopes to receive a financial return in the form of dividends on rent received as well an increase in the value of the property subsequently shown as an increase in share price. The value of investment may go down as well as up and, as with all investments, you may get back less than you have invested. Indirect property investment allows investors to enter property markets without having to provide the full, up-front capital of buying a house or flat.
Your shares are held in a nominee account, registered in the name of Property Partner Nominee Limited. This account is ring-fenced from the assets and liabilities of Property Partner. You, as the beneficial owner, will receive all of the economic benefits including dividends and capital returns. More information on the nominee structure can be found on the Property Partner site.
Investment Costs are calculated using a First In First Out (FIFO) costing method per share, rounded to the nearest penny.
What income is taxed?
With that in mind, you will then have to consult the laws of your country of residence to determine the tax rates for capital gains and dividends.
Please note that I am not an accountant or financial advisor, the above is the fruit of my personal research, and might contain inaccuracies. Before you submit any tax returns, I highly recommend you contact a tax consultant or accountant to check your numbers.