***BUYING PROPERTY THROUGH LTD COMPANY***🏠👀🏠
I spoke to a CHARTERED accountant yesterday & asked a bunch of questions about buying property through a Ltd company vs Buying personally to rent out.
Let me go straight into it & hope this helps! ✅✅✅
Pro’s vs. Cons 🤓⬇️⬇️⬇️
I spoke to a CHARTERED accountant yesterday & asked a bunch of questions about buying property through a Ltd company vs Buying personally to rent out.
Let me go straight into it & hope this helps! ✅✅✅
Pro’s vs. Cons 🤓⬇️⬇️⬇️
PROs: ✅
• Tax efficiency - if you’re a higher rate tax payer (we’re all on £100k+ so this includes everyone), you will pay corporation tax at 19% of the PROFIT rather than 45% of your rental income tax. There are also rumours the corporation tax will be going to 17% lets see 👀
• Tax efficiency - if you’re a higher rate tax payer (we’re all on £100k+ so this includes everyone), you will pay corporation tax at 19% of the PROFIT rather than 45% of your rental income tax. There are also rumours the corporation tax will be going to 17% lets see 👀
• Limited Liability - Because it’s a Ltd company, you will not be personally liable 😅 for any losses meaning creditors only have access to the company’s assets.
• Long term, there are inheritance tax benefits i.e you can make family members shareholders in your company. 👨👩👧👦💰
• Long term, there are inheritance tax benefits i.e you can make family members shareholders in your company. 👨👩👧👦💰
• Multiple shareholders - if you have family/partner who earn a lower salary you can pay them a salary/dividends & take full adv of their tax allowance.💰
• Through a Ltd company you can reinvest the rental income/profit from the business into more property/marketing etc.✅
• Through a Ltd company you can reinvest the rental income/profit from the business into more property/marketing etc.✅
CONs 🚫🚫🚫
• There are more costs/paperwork involved i.e accountancy fees and preparing year end accounts for submission to your accountant 📝
• Buy-to-let mortgage rates through Ltd companies tend to be slightly higher than if you were buying personally 📈📈📈
• There are more costs/paperwork involved i.e accountancy fees and preparing year end accounts for submission to your accountant 📝
• Buy-to-let mortgage rates through Ltd companies tend to be slightly higher than if you were buying personally 📈📈📈
• Mortgage Availability is more limited through Ltd company with less products available, although this is changing fast.🙅🏾♂️
• Transferring a current property into a Ltd company comes at a significant cost. If the value has increased you will be subject to capital gains & SDLT
• Transferring a current property into a Ltd company comes at a significant cost. If the value has increased you will be subject to capital gains & SDLT
Other comments: 🙋🏾♂️🙋🏾♂️🙋🏾♂️
There are many ways to extract funds from a Ltd Company via:🤑🤑🤑
1. Directors Loans
2. Salary
3. Dividends - 2% tax rate annually
4. Pensions - these are tax deductible and you can send them to a SIPP to be accessed at 55.👴🏾
There are many ways to extract funds from a Ltd Company via:🤑🤑🤑
1. Directors Loans
2. Salary
3. Dividends - 2% tax rate annually
4. Pensions - these are tax deductible and you can send them to a SIPP to be accessed at 55.👴🏾
💪🏾🤐Allowable expenses include everything used for the business i.e:
1. Refurbishment costs 🤫
2. Legals✅
3. Lettings agency costs🤫
4. Cleaners✅
5. Travel costs 0.45p per mile if you’re properties are far away🤥
6. Furnishings 🤥
7. All landlord safety check certificates✅
1. Refurbishment costs 🤫
2. Legals✅
3. Lettings agency costs🤫
4. Cleaners✅
5. Travel costs 0.45p per mile if you’re properties are far away🤥
6. Furnishings 🤥
7. All landlord safety check certificates✅
All in all depending on your strategy if you’re looking to invest in rentals 4 the long term & want to start building generational wealth, a Ltd co looks like the best option. However, you need to be clear on your strategy. 📝📝📝
Another thing to mention is that it seems like setting up the Ltd co before you get a buy-to-let will save you ££££’s
🔑Key point also: Due to tax reasons it may be best to have separate Ltd companies if you’re flipping properties as well as a rental portfolio (seek advice).
🔑Key point also: Due to tax reasons it may be best to have separate Ltd companies if you’re flipping properties as well as a rental portfolio (seek advice).
🚫✅🚫Disclaimer🚫✅🚫- this is information I have been given by a chartered accountant so with everything financial always do your own research. I hope this helps.
Love, light & prosperity. 🙏🏾🙏🏾🙏🏾🙏🏾
#property
Love, light & prosperity. 🙏🏾🙏🏾🙏🏾🙏🏾
#property
