In the Autumn of 20015 the UK government announced changes to the taxation system for landlords and second home owners. The result means taking out a mortgage and purchasing a buy-to-let property through a limited/Ltd company or a special purpose vehicle (SPV) can be more tax efficient than buying a property in your personal name.
Owning a buy-to-let property in your personal name means the rental income from that property is added to your personal income which can push you into a higher income tax band. However, rental profits from property held in a limited company is subject to Corporation Tax which is currently at 19% (2020 – 21) and has no relation to your personal income.
There are also expenses like mortgage interest where tax relief can be claimed if the property is owned in a limited company whereas this is not the case if the property is owned in your personal name.
We recommend you speak to an accountant with regard to the tax benefits of buy-to-let owned properties within a limited company verses personal ownership.
If you are are looking to purchase a buy-to-let property under a limited company or you are looking to remortgage under your current limited company arrangement feel free to click here to contact us to arrange a free 15-minute consultation where we would be happy to explain the best options available to you.
Please Note: The Mortgage Xchange is a partner of Scott & Goose LLP who are directly authorised by the Financial Conduct Authority under reference 661183. Your home may be repossessed if you do not keep up repayments on your mortgage.