This information should not be interpreted as financial, tax or legal advice. Mortgage and loan rates are subject to change.
Category: limited company
If you are considering investing in buy to let mortgages via a limited company, getting to grips with the costs is important. Given that stamp duty is a big cost associated with buying property, it’s particularly important to be clear on where you stand.
This guide takes a look at stamp duty and property investment, and gives some insider insights on how some people approach this and the problems that can arise.
Stamp Duty Land Tax (SDLT)
In England and Northern Ireland you pay SDLT when you buy a property. You can use our online tool to calculate SDLT on buy to let property.
There is a similar tax in Scotland, called Land and Buildings Transaction Tax (LBTT) and one in Wales, called Land Transaction Tax (LTT).
SDLT is paid when you buy a buy to let property via a limited company.
Transferring property from personal name to limited company name
If you own a buy to let property in personal name, but are thinking about holding it in a limited company, be aware that in law this is a change to the legal ownership of the property.
What does this mean? Well, you are in effect selling your property to your company, even though you may be the only director of the company so in reality no one else is involved. So your company is buying the property and will have to pay stamp duty.
Having already paid stamp duty when you bought the property yourself, you might conclude that this doesn’t make financial sense.
A great deal of the benefit to owning property via a limited company comes down to tax, so you will need tax advice to work out if this is right for you.
Tax advice and mortgage advice should go together
It is very important to get advice on tax and on mortgages and cross reference what each advisor tells you with the other.
A tax advisor may tell you to take a certain action to achieve a financial efficiency, but it may impact your ability to get a buy to let mortgage in the future.
Speaking to a specialist mortgage broker after seeking tax advice may be invaluable to your investment plans.
A specialist broker will have close working relationships with buy to let lenders. They can speak to the business development manager or underwriting team at a lender and describe how you propose to handle your limited company set up.
With feedback from lender contacts on whether your plans will impact your ability to borrow, you can make final decisions on what you will do with all the information at hand.
You can talk to an advisor via live chat, call on our Freephone number above or submit an enquiry for a call-back.
