Could a Limited Company be the Best Structure for Many Buy to Let Landlords?

Monday, August 29th, 2022

The last few years have seen many property owners using a limited company structure to own and manage their buy to let investment properties. More recently, the good news is that not only is there now a much greater choice of lenders but also that the product choice is steadily increasing too.

Professional Advice is Key

As most mortgage brokers are not qualified to give tax advice, it is commonplace for a mortgage broker to recommend the services of a specialist/tax accountant to ensure that the landlord receives professional tax guidance on whether to own buy to let property personally or via a limited company. Alternatively, where a property owner already uses the services of an appropriately qualified accountant, then that works well too.

Once a decision has been made to acquire the property using a limited company structure, a professional mortgage broker is then able to advise as to what will, in all circumstances, be the most appropriate limited company buy to let mortgage.

Some Important Considerations

Detailed technical tax guidance to one side, here at Caboodle Finance we find that many property owners are keen to understand in outline what some of the potential benefits or perhaps pitfalls may be of setting up a limited company (which will then acquire property assets and then receive any income generated by those properties) as opposed to acquiring them directly.

One potential benefit includes long-term estate and inheritance planning because any transfer of the ownership of a property holding limited company to another person by say a sale of shares in that company may be more tax efficient when compared to a transfer where that same property is instead held by an individual. This is because the property will continue to be owned by the limited company, meaning that any Stamp Duty Land Tax, Inheritance Tax, and Capital Gains Tax that may have been due (if the property had instead been owned directly) could be reduced, or even negated.

Conversely, one of the disadvantages of using a limited company is that an individual’s annual Capital Gains Tax allowance cannot be used when selling an asset that was purchased through a company, with any gain instead being subject to Corporation Tax.

Get Expert Mortgage Advice Before Deciding

As previously stated, as professional mortgage brokers we always insist that our clients, prospective or otherwise, take tax advice before proceeding. That said, in the meantime, if you would like to know a little more about purchasing a buy to Let property via a Limited company, please check out our dedicated page.

Our team always does its utmost to ensure that our clients always receive the best mortgage advice, so whether you are an existing landlord or just getting started on your property journey and would like to know more, please call Caboodle Finance of Sutton Coldfield, Birmingham today on 0121 308 9114 to speak in complete confidence with one of our expert mortgage brokers.

Alternatively, contact us via the website HERE and one of our friendly buy to let mortgage specialists will be in touch.

We very much look forward to hearing from you.

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT. CONSOLIDATING DEBTS MAY INCREASE THE TERM AND TOTAL AMOUNT PAYABLE.

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Caboodle Financial Services Ltd, registered in England and Wales at Mere Green House, 46-48 Mere Green Road, Sutton Coldfield, West Midlands B75 5BT (number 08044670).
Caboodle Financial Services Ltd is an appointed representative of PRIMIS Mortgage Network (PRIMIS), a trading name of Advance Mortgage Funding Ltd which is authorised and regulated by the Financial Conduct Authority. PRIMIS is only responsible for the service and quality of advice provided to you in relation to mortgages, protection insurance and general insurance products. Any other product or service offered by Caboodle Financial Services Ltd may not be the responsibility of PRIMIS and may also not be subject to regulation by the Financial Conduct Authority. The Financial Conduct Authority does not regulate some forms of Buy to Let.

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