Using A Limited Company To Buy Residential Property

Simon Misiewicz

Simon Misiewicz

Expat & Property Tax Specialist

30th June 2020

Should you buy property through a limited company?

It is essential to decide how to purchase a buy to let property in your name or buy a property through a limited company . We would suggest that you:

1 – Look at your current financial position of you and your spouse/civil partner

2 – Review what the financial income and tax position of your and your spouse/civil partner will be in the next five years

3 – Work out one structure’s tax savings against the buy to let mortgage interest costs of such an implementation. You should consider the additional costs of using a limited company, such as bookkeeping and limited company accountancy services.

4 – If you are keen to leave your employment job in the next five years, then it might be better to buy the property in your name

5 – A limited company may be better for you if you and/or your spouse/civil partner remains a high rate taxpayer because of work or business activities. You do not need the money from your property investments.

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You might be interested in our property incorporation services to transfer your buy to let portfolio into a limited company written by our accountants for landlords. You ought to be comfortable answering the question, “how to you buy a house through your business?”

If you are unsure of how to set up a property company, please ensure you read our article and get some support from a property accountant.

Incorporate your properties into a limited company

Many of our clients have now moved their property portfolios into a limited company to save income tax. Is it time for you to avoid Section 24 mortgage interest relief cap?

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Buy property through limited company

There are many reasons why landlords buy a property through a limited company. A limited company has a corporation tax rate of 19%. The 19% rate is much lower than the 40% for high-income taxpayers. It is also much lower than the 45% for additional rate taxpayers.

We see more and more landlords that set up a property company to save money for the short and long term.

If prosecuted, a property investment company risks its assets being taken away. However, the company’s shareholders can relax because their assets are not at risk. This is provided that they have not signed a personal guarantee. The other reason UK landlords use a limited company is to minimise risk. If there is a legal case against you as a sole proprietor, your assets could be at risk if found guilty, and you have to pay large sums of money to the claimant. Have you identified the critical advantage of owning a property investment company?

Buying property through a limited company can be advantageous, and working with a property accountant is essential to get it right the first time.

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Should you use a limited company for property investment?

The sole aim of this article is to understand the pros and cons of using a limited company as a UK landlord. We need to highlight why landlords like property investment companies. A limited Company for property investment has financial benefits, but you need to consider the costs to get a balanced view.

How do I transfer my rental property to a limited company? Yes, according to our Property accountants

We have written an article on how to incorporate your property portfolio into a limited company.

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