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Benefits of buying in a Limited Company?

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Author Topic: Benefits of buying in a Limited Company?  (Read 112 times)
Newbie
Posts: 1

I like property

« on: January 03, 2021, 05:24:24 PM »

Im currently looking at increasing my portfolio from 2 properties to 5 or 6 properties within the next 5 years and have heard about a lot of people buying in a PLC as opposed to in their own name. Im aware of the basic tax benefits of this, but I was wondering if everyone has found this to be beneficial in real life or is it just a accountancy exercise.

Many thanks.
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Posts: 503

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« Reply #1 on: January 05, 2021, 11:20:38 AM »

I think you mean a private limited company rather than a PLC. Whether it's worth it depends on whether the tax shield on your corporate debt exceeds the annual cost of faffing about with a company, plus any additional interest premium a lender may charge a company rather than an individual, plus the one-off tax costs - stamp duty and CGT (although that's really just a timing issue) - if you want to transfer your existing properties into the company.
Newbie
Posts: 1

I like property

« Reply #2 on: January 18, 2021, 05:16:20 PM »

I've just been through this exact thing.

I chose to set up a Ltd. company to buy a large house that was split into 4 flats and it works for me.

My reasons:
 - My day job + existing 2 B2Ls were getting close to the 45% tax bracket, the income from the new investment would push it over
 - The mortgage interest I am able to claim back is more than the saving of the more expensive Ltd BTL (note for me the ltd BTL was ~1% more than a personal BTL)
 - I dont need to live on the rent income of the new flats, the profits can stay in the company forever to pay back the directors loan (the money i lent into the company for the deposit/initial operating costs) or buy more property. (i.e. i dont need to take it out and pay tax on it)
 - Corporation Tax is currently only 19% rather than the 40% higher rate
 - You can only have 3 personal BTL mortgages before it gets really tricky to get more

There are a bunch of things you need to sort out, but if you are good with paperwork then its not too onerous.  I'm happy to share if anyone has questions :-)
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