by Rajiv Singh, 07-10-2021

Buying property through limited company or personal ownership

The United Kingdom is a leading topnotch city with a booming property and rental market that gains from regular capital growth. It is a magnet for property investors. Recently, there has been a move towards buying property through limited companies. A record breaking 41,700 new, buy-to-let limited companies were formed last year in 2020, a 23% increase compares to earlier year according to Hampton International.

Are you a business owner, landlord, or Personal professional operating? You can buy to let through limited company.
Let’s consider the Pros and cons of options of buying property through a limited company or personal ownership.

Pros of buying property through a limited company or personal ownership (PSC) of corporate structure

1. Tax Treatment of Profits
When you invest in property through a limited company or personal ownership (PSC) corporate structure, you will be liable for corporation tax on your profits, such that if you are a high-rate taxpayer, you will stand to make a huge tax saving.

2. Mitigate Inheritance tax
Did you know that as a landlord, while organizing to pass your property portfolio down to either your children or family members, you can avoid the enormous cost of inheritance tax when you buy to let through limited company?
Yes, buying property through a limited company could minimize the inheritance tax. It also includes changing the way your portfolio is owned, to take properties outside estate planning for Inheritance Tax purposes.

3. Tax treatment of mortgage interest
Unlike privately owned property, for limited companies, mortgage interest will be treated as a business expense for you to deduct costs before paying corporation tax.
Before introducing buying of properties through limited companies, private landlords cannot deduct any of their mortgage expenses from renting to reduce their tax bill. As a substitute, they often receive a tax credit, which is based on 20% of their mortgage interest payments.

Cons of buying property through limited company or personal ownership (PSC) of corporate structure.

While buying of property through a limited company sound like a good idea, there are some cons you should know.

1. Extra cost
Limited companies necessitate filling annual accounts and there are higher accountancy costs associated with this. It is important to also know that running a limited company will require more paperwork and administration.

2. Mortgage availability
The number of mortgage products available to offer for limited companies is lower than for individuals. Also, owning to the fact that mortgages for companies were expensive, limited, and had lower borrowing limits, this is another drawback of buying property through a limited company or personal ownership.
You may also find it difficult to arrange a mortgage, and the interest rates that come with it may be higher.

3. Dividend taxation when you take money out
For you to get access to your rental income, you can as well pay yourself a salary. This is liable to income tax and also counts as a cost when calculating pre-tax profit for corporation tax purposes.
Buying and investing in property is a bold decision. The good news is that the long-term rewards, either for yourself, your business or your family, in terms of income and capital, are potentially generous.

RentOnCloud premium plan for Landlord subscription provides company accounting access along with dedicated qualified chartered accountant partnered with CoreAdviz who will be reviewing your company accounts before periodical submission to Company house and HMRC via RentOnCloud application.

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About Rajiv Singh

A Chartered Accountant in UK with 15+ years of experience in FinTech Consulting, Accounting & International Taxation. I enjoy being a Social, Foodie and Father of two young children, reachable at

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