06 May 2024
What is the most tax efficient way to set up your property ownership? This really depends on your strategy. Setting up in your own personal name provides capital gains allowances and Principle Primary Relief on your capital gains if the property was previously your home.
This really depends on your strategy. Setting up in your own personal name provides capital gains allowances and Principle Primary Relief on your capital gains if the property was previously your home.
Alternatively a limited company can help to reduce tax liability on your income as the initial deposit can be a director’s loan into the business, and you can allow rents to stay within the business, thus potentially allowing many years of rents without income tax.
This can be perfect for higher rate taxpayers looking to eventually reduce their employed income or close to retirement or people looking to grow their portfolio. However, setting up a partnership can allow you to set up in your personal names and change it to a limited company at an opportune time, without incurring extra stamp duty.
Before you do purchase a buy to let, make suer you get expert advice from a qualified tax planner as the correct set up will save you thousands.
The cost of financing can rapidly eat into, or increase, your returns. Whilst personal buy to let rates are cheaper than limited company rates, limited company rates are getting more competitive. All of which means, if you’re considering the tax advantages of setting up as a limited company, then you have a lot more to consider than just the headline interest rate.
Getting the manner in which you own the property right from the start can also save you money in mortgage interest so speak to an accountant from the outset.
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