Is a Limited company buy to let better than a personal buy to let?
Purchasing Buy-to-Let properties through a limited company does offer advantages instead of a personal buy to let, however, it is essential to consider the associated drawbacks. The decision should be based on your individual circumstances, and knowing the implications involved in owning Buy-to-Let properties through a limited company. You would need to have a Special Purpose Vehicle ( SPV ) set up before you can apply and you need to make sure you have the correct SIC code when you set up your company.
What are the advantages of buying through a Limited Company?
If you buy through a limited company there are advantages for landlords to operate as limited companies as opposed to sole traders, especially if you’re a higher rate taxpayer. Your property portfolio as a limited company may mean paying corporation tax compared to paying as a private individual. An additional benefit of buy-to-let as a limited company is being able to take some of your income in the form of dividends, which are taxed at a different rate to PAYE income.
Another advantage, is that you can apply for a Limited Company buy to let mortgage as soon as the company ( SPV ) has been set up. You will also need to make sure you have a Business bank account set up for your new Limited Company before applying.
What are the disadvantages of Limited Company buy to let mortgages?
The interest rates and set up fees are generally higher for Limited Company mortgages. You will also find that not all lenders will consider limited company mortgages, so this may restrict your mortgage lender choice and the mortgage products available. You may also have extra costs from your accountant and additional legal costs.
So it is always good to do a full cost comparison between buying a property to let under a limited company compared to buying in your personal name.
If you’re considering a buy-to-let mortgage contact Fuse Financial on 07786078115 or hello@fusefinancial.co.uk
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