Are you looking to buy more properties?
Are you concerned about paying the new stamp duty rates?
Given the 2015 budget announcement, which I wrote about some time ago, you’ll have seen that there are now penalties for buying and holding property investments in your own name:
- Mortgage interest relief cap
- 3% Stamp Duty Land Tax (SDLT) surcharge for residential buy to let properties
You would be hit with a double tax burden if you were looking to buy properties now and hold them in your own name. But there may be another way…
Buying property portfolios that are held in a limited company
SDLT is charged on land and property. Buying shares in a company attracts a different level of tax with Stamp Duty (SD) at 0.5%, which is considerably less than if you purchased several properties from an individual as you would have had to pay the normal scaled level of SDLT, plus the 3% surcharge.
So if you are looking to buy properties ensure that you buy the company that holds the properties to take advantage of the different stamp duty levels.
Once you have identified a company to purchase then you will need to buy the company in your own name or have it as part of your group of companies. You will need to complete a stock transfer form to ensure that the ownership changes hands.
And, of course, having properties in a limited company has the added advantage that you can offset all of your mortgage interest costs against your property income, which as a higher rate taxpayer you will soon not be able to do.
Next steps — buying a property portfolio
If you want to understand how to implement this strategy or to discuss other finance/tax questions then please book some time with us using the below calendar.
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If you are looking for a new accountant then please book some time with us using the below calendar. Please note that this booking is to describe our services and will not be used to discuss your personal tax affairs.