Limited company buy-to-lets

Since, mortgage interest tax relief was reduced on buy-to-let mortgages, a growing number of landlords have purchased investment properties via a limited company, rather than in their own name. The advantage of a limited company buy-to-let is that amount of tax relief you can claim has not been reduced. As a result, if you are a higher rate taxpayer, the tax payable via a limited company is lower than tax on individual income. Also, there is no income tax on the retained profit, allowing more cash to re-invest. Corporation tax on profits is payable but is lower than higher rate income tax.

But while there are advantages, there are also disadvantages. Limited Company Mortgages costs tend to be higher on a limited company buy-to-let. Therefore, they often only make sense if you own several properties within a limited company umbrella. The cost of switching from personal ownership to limited companies can also be high. So, it may only be useful for purchasing new properties, rather than shifting over existing properties.

Investors should seek specialist tax advice. SWG can advise on the mortgage side of things and arrange a limited company buy-to-let mortgage for you, if that is the approach you decide to take.