Buying as a Limited Company

Date Published 29 December 2018

Thinking of one of your New Year resolutions is to buy a buy to let property?
Have you thought about buying a property as a limited company?
From April 2017 to 2020 the amount of buy to let tax relief you can claim back will be cut, from 45% down to 20%, affecting many top rate taxpayers.
Interestingly though, this change does not affect limited companies. As such, a limited company can still fully offset mortgage interest.
Plus for those wishing to develop a portfolio of buy to let properties, within a limited company there is no income tax on the retained profit, so perhaps this could then allow you more cash to reinvest in further properties.
Note though that Corporation Tax is payable on trading profits, albeit this can still be lower than the higher rate income tax rate.

There are downsides such as there is no capital gains tax allowance when you come to sell the property and lenders generally charge high interest rates for limited companies taking mortgages.

Perhaps it might be worth speaking to your Tax advisor to get their take on it all?