This information should not be interpreted as financial, tax or legal advice. Mortgage and loan rates are subject to change.
Category: limited company
When the tax rules for buy to let investing changed, and mortgage interest was no longer tax deductible, huge numbers of landlords started to invest in buy to let via a limited company.
But, you might be asking, ‘what’s the catch’? This guide answers the question “are there disadvantages of limited company investing”, to help you get a rounded picture of what you should consider before going ahead with incorporation.
Putting an existing property into a limited company structure
You may not realise this, but if you want to take a property you own and put it into a limited company, you are in effect selling the property from your personal name and buying the property in your company name.
This will cost you money and requires legal work.
You will avoid the costs of attracting a buyer, so estate agents costs are not applicable, but there are other costs to pay.
Your limited company will have to pay stamp duty on the purchase, a new mortgage will have to be arranged so a conveyancing solicitor will be necessary.
A mortgage lender will treat the change in ownership as a purchase by the limited company. Some lenders offer incentives with their mortgages, where they will cover the cost of the property valuation. However, this is not always the case and so this may be a cost you have to cover.
Buying additional properties via a limited company
If you start from scratch with buying a property, and choose to do that through a limited company, you won’t encounter the issues you get when transferring properties into a company that you already own.
If you were buying in personal name and might instead buy via a limited company, you would face costs typically associated with a purchase in any case.
Mortgage costs
Limited company buy to let mortgage rates are typically a little bit higher than products taken out in in personal name.
The gap between the two has narrowed, as demand for them has risen and lenders compete with one another, but it is worth bearing this in mind as part of your planning.
Mortgage product fees can also be a bit higher too, which relates to the more specialist nature of this investment route.
The advantages of buy to let via a limited company
With so many landlords and property investors choosing to set up a limited company to invest in property, there are clearly advantages for some people.
These advantages centre on tax, and cost efficiencies that can be achieved in certain circumstances – which can be particularly favourable to higher rate tax payers. To understand your position, speak to a professional tax advisor.
Our guide “A limited company or personal buy to let - the right choice”, summarising the subject may help you prepare for a conversation with a tax advisor.
Ready to invest?
If you have found a property and are ready to discuss your mortgage options, use the expertise of our mortgage advisors to get a great deal on a limited company buy to let mortgage. You can talk to an advisor via live chat, call on our Freephone number above or submit an enquiry for a call-back.
