FINANCIAL
Buy to let Company or personal? ary Anne argeant, Partner at M+A Partners Accountants, guides you through the process.
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re you thinking about buying an investment property, or perhaps you already own a buy-to-let and are looking to expand your portfolio? If so, you may have questions around the most beneficial set up for your circumstances – should you purchase and manage as an individual or through a limited company? If the intention is to rent out one or two properties, setting up a limited company is unlikely to be the right route. However, if a property portfolio is to be built up, then it may well be helpful to create a limited company from the outset. Company ownership Buying a property through a company is becoming an increasingly popular choice for investors. According to Companies House data, a record ,
new UK buy to let companies were incorporated in . Purchasing a rental property through a limited company o ers full tax relief on finance costs such as mortgage interest and arrangement fees, access to potentially lower tax rates and flexibility for planning. f the aim is to invest in several buy to let properties, and there is no need to draw much, or any, income from the rent, the company structure could be an attractive option. ncome received from rentals can be retained within the company for future reinvestment, without impacting your personal tax return. Personal ownership f you are looking to use your rent as a form of income to live on, purchasing as an individual may prove to be the more tax e cient solution. However, it’s worthwhile noting that you can no longer deduct mortgage interest from your property income before paying tax. As well as restricting tax relief to the basic rate ( ), this measure also has the e ect of increasing taxable income and can result
in you becoming a higher rate taxpayer, in turn a ecting certain benefit entitlements such as child benefit. Personal ownership typically attracts preferable mortgage rates and lower fees than through a limited company. Arrangement fees, which can either be paid up front or added to the mortgage, also tend to be lower when you are buying as an individual. Mary-Anne Sargeant
There are many variiab bles that will influence your decision on how to purchase your buy-to o-let properties, and it can be help pful to seek professional advice. At M+A Partners Attleborough, we have an experienced tax team who will be able to assist witth any queries you might have when starting out on your buy-to-let journey. Get in touch with uss on 01953 452077 or email mary-anne.sargeant@ mapartners.co.uk. Visit our website mapartners.co.uk/ property for a range of downloadable property relatted resources. For the latest accounting and tax updates,, sign up to our newsletters att mapartners.co.uk.
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