To buy LTD or not

Discussion in 'Property Investment Strategies' started by jennifer day, May 27, 2019.

  1. jennifer day

    jennifer day New Member


    Looking for initial thoughts on buying as a Limited Company or as an individual.

    I understand all the basics in terms of pros and cons and as a higher rate taxpayer essentially if I was looking for short term use the income straight away I would just by as an individual and suck up the tax vs if I was going to just keep reinvesting the income into buying more properties I would go the company route and suck up the capital gains tax longer term.

    My strategy is somewhere in between which isn't covered in all the usual info. I'm looking to buy HMO, renovate and remortgage (keep recycling the deposit) for 5 years in which time I won't be touching the rental income. After 5 years I'll want to go part time (but will still be higher rate taxpayer) or quit and start using some or all of the rental income.

    In this instance is 5 years long enough to warrant setting up in an LTD?

    Wondered if anyone was in a similar situation of if anyone has a reliable specialist tax advisor they could recommend as my current one is too generalist.

  2. realdeals

    realdeals Active Member

    I would take advice from your accountant but personally I think the LTD route keeps everything cleaner. There are also ways and means of reducing your tax from company income and using the dividend route.
  3. jennifer day

    jennifer day New Member

    Thanks reassuring to hear and all signs seem to be pointing that way.
  4. realdeals

    realdeals Active Member

    It is also worth looking at mortgage interest relief as it is being phased out in favour of a flat basic rate allowance - hence higher rate tax payers will lose out. However, if the property/funding is held within a ltd company then the interest charge can still be fully offset against profits.
  5. There is a tipping point when it becomes more cost effective to put BTL investments in a company but I am not sure off the top of my head what the figure is. I would suggest changes in mortgage interest relief will make it even more attractive. However, best to take professional advice.

    For further down the line - if you decided to sell the company there would be no paper work required for each property. The properties would be still owned by the company and it would just be ownership of the company which would change.
  6. Longterminvestor

    Longterminvestor Administrator

    If you have long term expansion plans I would be inclined to go down the Ltd company route. Much simpler and the great the rental income involved the better from a tax point of view.
  7. diyhelp

    diyhelp Active Member

    While there may be some changes with regards to property taxes in the short term, with a change of prime minister, the threat of the left-wing Labour Party still hangs heavy over the country. If the Labour Party was to be voted in at the next election you could probably expect more taxes.
  8. FWL

    FWL Member

    I am not sure we will see major changes in the short term - money will be tight after Brexit and in many ways this just plays into the hands of Tory opposition parties.

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