The last few years we have witnessed an unprecedented wave of legislation against buy to let landlords.
First there was the 3% rise in stamp duty for second or more properties. Then there was the removal of tax relief on interest payments for higher rate taxpayers.
If that wasn't enough, the wear and tear allowance worth 10% of rents on furnished was also abolished.
Tax bills for landlords buying property in their own name will undoubtedly have risen substantially - and keep rising until 2020/21 when the impact of the removal of interest relief fully kicks in.
The question normally posed is,
should I buy property as an investment through a company to keep my tax bills down?
Answer as with most things in tax is, it depends!
Firstly you need to be clear on what your objectives in property:
Once you're clear on your objectives then you can properly determine which ownership structure would work best for you tax wise.
The options for ownership range from personal to partnership to limited company to limited liability partnership (LLP) and even a family trust.
If you are looking to build to a long term property portfolio with multiple properties then it is likely that the company route will be the way to go.
The advantages of holding property via a company rather than personally are as follows:
The disadvantages are:
If you are looking into buying property as an investment to develop and then sell at a profit, then a company offers more advantages than not.
Some of these are as follows:
Historically lenders have created all sorts of obstacles for purchase through a limited company.
However since the new legislation was introduced, purchase of properties via a company has become more commonplace and lenders have adapted accordingly. It is now a lot easier to get mortgages through a company than it used to be.
What about existing properties?
Should I transfer them into the company? A topic for a future blog ... ;-)
Get your objectives clear first then you can take advice on which structure would be best for you going forward.
Hope that's been useful.
Reza
02380 610573
info@walji.uk.com
Prospect House, 50 Leigh Road
Eastleigh, Hampshire, SO50 9DT
Walji& Co Chartered Accountants and Business Consultants is rated 5 out of 5 based on 81 Google reviews.