Taking out a mortgage and purchasing a Buy to let property through a LTD company or SPV (Special Purpose Vehicle) can be more tax-efficient than doing so in your personal name as a private landlord.
Why purchase a Buy to let property as a limited company?
You pay income tax on rental income from Privately-Owned Rental Property
- To calculate how much Income Tax you must pay, your rental income is added to your overall personal income which may push you into a new tax bracket and result in you paying Income Tax at a higher rate
You pay income tax on rental income from Privately-Owned Rental Property
- Unlike Income Tax, there are no upper tiers for Corporation Tax – Corporation Tax is set at a static rate of 19% (2021 – 2022), which means that’s the maximum rate you’ll be charged unless the Government change the rate of Corporation Tax itself
- You can offset many expenses against the income for a company that you can’t with a privately-owned rental property
How to get a mortgage through a Limited Company?
Speak to our Top Rated Adviser
You’ll need a specialist mortgage broker like LOUPE to apply for a buy-to-let mortgage through a limited company. Not only do we understand what criteria you need to meet for your mortgage, but most limited company buy-to-let mortgage lenders won’t accept your application unless you use an intermediary.
Consult a Tax Adviser or Accountant
For help setting up a limited company for buy-to-let purchases, consult a tax adviser/accountant. They’ll be able to make sure everything is set up properly. You may want to approach a tax adviser/accountant before speaking to a mortgage adviser. That way, your limited company can be set up and you’ll be ready to start the mortgage application process when you first speak to us.
FAQs
Do limited companies pay stamp duty on property?
Stamp Duty Land Tax – Just like property bought by an individual, your limited company must pay Stamp Duty Land Tax and the 3% second home surcharge.
Can a landlord be a limited company?
When a landlord registers as a limited company, the company must have legal ownership of the properties in the portfolio. They can’t simply transfer them – they must be sold by the landlord to the company, at the market rate.
Should I set up a ltd company for buy to let?
But while those landlords holding their property in a company can offset more costs against their rental income, mortgage interest rates tend to be higher. It means that setting up a company to hold buy-to-let property tends to benefit higher-income taxpayers, or those with multiple buy-to-let properties.
Does a Ltd company pay capital gains tax?
You pay Capital Gains Tax if you’re a self-employed sole trader or in a business partnership. Other organisations like limited companies pay Corporation Tax on profits from selling their assets.
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