What is a UK property investments limited company? Why do UK landlords & investors set up a buy-to-let company to save tax when investing in properties? What are the key benefits of setting up a company for UK and international landlords? Using a UK property investment limited company can be tax-efficient for landlords and investors alike to maximise their rental incomes. All investments need to be made with tax in mind. Setting up an investment LTD is a way to do this. Using a limited company requires you to pay tax to HMRC. Feel free to use our free online corporation tax calculator. Use our buy-to-let property tax calculator to see how much tax you will pay in your own name Vs a limited company What are the basics of setting up an investments companies to purchase buy to let properties? UK property investment companies are vehicles to help UK landlords to invest in Buy-to-lets. They are different and can specialise in various types of portfolios like purpose-built student accommodation, HMOs, traditional residential property, and off-plan. They can also offer opportunities with specific selling points, such as properties with high rental yields or long-term capital growth potential. Setting up an investment company includes any company (corporation, business trust, partnership or limited company) that issues securities and invests in securities. UK landlords may invest property personally or through an investment company. Investment refers to acquiring property to obtain a return on the investment by rental income, resale, or both. The set-up of a company for property investment is a popular way for UK landlords to grow property portfolios. Investment companies need to be set up correctly to avoid administrative and tax nightmares in the future. What are the benefits of investments limited Co? Some landlords choose to enlist the help of a property company when investing in buy-to-lets. Some of the main benefits of this include: – Time-saving – UK property investment companies find top opportunities – Landlords get connected with management firms in the UK – Investors get access to low prices – Landlords can get exclusive deals by working with a UK investment company – Affordable plans make property investing achievable and lower-risk – The process of buying is simplified – Working with a UK property investment company builds confidence for first-time landlords The biggest benefit is time-saving. This includes monitoring websites such as Zoopla and Rightmove, researching online, and booking property viewings. This can be preferable for UK landlords who work full-time and don’t have the time to research and purchase properties for their own portfolios. What are the pitfalls? Not every property strategy is suitable in the set-up process. Some UK landlords are put off by the potential pitfalls of setting up an investment company, such as: – Patience is required when investing in off-plan – Hands-on experience will be minimal – The choice of assets could be limited Off-plan properties can take six to 12 months to reach completion, so investors need to be patient during the building process. Does a UK company pay less Stamp Duty? Many landlords and investors we work with choose to invest through their own limited companies to save tax. That is why many landlords set up an LTD. From April 2020 a personally-owned buy-to-let property investment could no longer have the mortgage interest payments offset as an expense against rental income on self-assessment tax returns. This is not the same situation for limited companies that hold property. Mortgage interest payments remain an allowable expense to reduce profits and corporation tax. UK landlords should be aware that their limited companies are still liable to pay the 3% Stamp Duty Land Tax (SDLT) surcharge when property costs more than £40,000. Furthermore, SDLT is charged at 15% on residential properties costing £500,000 and over. The SDLT rate is also exempt for companies that purchase properties for a rental business, developers and traders, property occupied by employees, a housing co-operative, farmhouses, and financial institutions buying property in the process of lending. What are the advantages of setting up a Limited Company for property investment? Setting up a Limited Company for property investment can offer several advantages, including potential tax benefits, better mortgage rates, and easier management of multiple properties. It also offers limited liability, protecting your personal assets from the company's debts. What distinguishes an Investment Company from a trading company in the realm of property? An Investment Company generally focuses on holding properties for the long term to generate rental income or capital appreciation. In contrast, a trading company usually buys properties, develops or renovates them, and sells them for a profit within a short period. Is it advisable to have a separate Investment Property Company for different types of properties, like residential and commercial? Having a separate Investment Property Company for different types of properties can make accounting and management easier. It also allows for more targeted investment strategies. However, there could be additional costs involved in setting up and running multiple companies. How do Property Investment Companies differ from REITs (Real Estate Investment Trusts)? Property Investment Companies are usually privately held and offer more control over specific property investments. REITs are publicly traded and pool money from many investors to purchase a diversified portfolio of properties. REITs often offer more liquidity but less control over individual investments. Can you transfer personally held properties into a Company Property Investment structure? Are there tax implications? Yes, you can transfer personally held properties into a Company Property Investment structure. However, this is generally considered a sale and purchase, which means you could incur capital gains tax, stamp duty, and other transaction costs. It's crucial to consult tax advisors to understand the full implications.