Tax efficient property ownership
If you are considering buying a buy-to-let property, owning it through a limited company has significant advantages.
We can form this company for you and advise on taxation and obtaining finance for property purchases.
Our corporate secretary service deals with all required share allocations and related matters.
Frequently Asked Questions about Corporate Property Ownership
Q: If my investment limited company owns a property, do I need to declare rental profits on my personal tax return?
A: No. Any rental profits generated do not have to be entered on your personal tax returns, or taken, if you own a property through a limited company.
Q: If my investment limited company owns a property, can I get tax free dividends?
A: Yes. From April 2024, dividends can be paid tax-free up to up to £500 per annum provided there are sufficient funds in reserves. We can also allot shares in the company to family members, so dividends are tax efficient.
Q: If my investment limited company buys a property, do I need to pay the stamp duty?
A: Yes, if a company buys any property, there will be a stamp duty liability; please contact us for further information.
Q: If my investment limited company owns a property, what impact does this have on capital gains tax or mortgage interest relief?
A: If any limited company owns a property, the capital gain is taxed at the prevailing rate of corporation tax when the property is sold.
However, if you own it directly, your capital gains are added to other income, and once the 40% high rate threshold is reached, will be taxed at 24%.
Owning any property through a limited company also means that you can leave shares to beneficiaries.
Conversely, buy-to-let properties owned directly would form part of your assets and be taxed at the highest applicable tax rates.
Moreover, from April 2017, mortgage interest relief has been restricted to the basic rate of tax, currently 20%. Higher-rate taxpayers cannot claim high-rate tax relief. However, limited companies are unaffected as they stil claim the full amount of mortgage interest relief.
Lastly, when you sell a property owned by a company, any profit can lead to a reduction in tax thanks to indexation.