Buying Buy To Let through LTD

[RajaStyle]

Hi All

Not sure if this has already been discussed on here (did a quick search) or if this is the correct location but any help appreciated.

Looking to buy my first BTL and with the new BTL changes there is talk of buying through a LTD as it is better to be able to offset expenses etc.

So my question is - Does anyone have experience if it is more beneficial from a tax perspective to use my IT Ltd company to purchase through, or should I setup a dedicated LTD company or neither and just keep it personal ?

I may buy one more later but that may be it, if it helps.

[MrMarkyMark]

Discussed plenty of times:-

https://www.google.co.uk/webhp?gfe_r...ntractor+forum

[LondonManc]

Hi All

Not sure if this has already been discussed on here (did a quick search) or if this is the correct location but any help appreciated.

Looking to buy my first BTL and with the new BTL changes there is talk of buying through a LTD as it is better to be able to offset expenses etc.

So my question is - Does anyone have experience if it is more beneficial from a tax perspective to use my IT Ltd company to purchase through, or should I setup a dedicated LTD company or neither and just keep it personal ?

I may buy one more later but that may be it, if it helps.

If you're renting homes, that's not the same company code as IT consultancy, so you'd either need to create a brand new separate comp or do it at a personal level.

Follow the link that MMM posted for a more detailed view on both.

[Maslins]

Legally you can buy a residential BTL property through your existing contracting (I assume) Ltd Co...but generally speaking most people consider it a bad idea.

Historically consensus was to own the property personally, however recent/upcoming changes to interest relief and stamp duty can make buying through a Ltd Co more appealing. Tends to make sense to have a separate Ltd Co for the properties though.

Me personally, I'd still buy the properties privately, keeps life simpler...but then I think it partly depends on whether your strat will be to clear the mortgage ASAP (in which case reduced tax relief on interest less of an issue) or to aggressively buy more, regularly releasing equity to expand the portfolio.

[ChimpMaster]

Set up a SPV under your Ltd if you want to buy within a corporate structure. That way you don't have to pay tax on extraction of funds only to then stick them into a separate entity for BTL purchase.

Be prepared to pay more for commercial loans but there are more coming on to the market as time wears on.

The planned Section 24 taxation will make leveraged BTL largely unviable, if you are already near or within the 40% tax threshold.

SLDT surcharge is still payable on your properties in a Ltd/SPV if you already own another property, even if that property is in your personal name.

If you do decide to set up a completely separate Ltd for your BTL business, you would 'loan' in funds to that Ltd to buy the property, which means that the loan would be repaid to you from the profits of the Ltd, tax-free.

[chopper]

If you are planning to buy a whole load of BTLs over the next year or two - then this is a legitimate business and best to do under a Limited company.

If you are planning on buying one now, maybe another one in a few more years time, then it is best to do it personally rather than through a Limited.

Basically - consider whether your BTL income stream would be supplemental, or whether you intend it to become your main income stream.

[Jess@ContractorFinancials]

Buying Buy to Let through LTD

Hi RajaStyle,

Purchasing a Buy to Let through a Limited Company is an option that many contractors are now looking into. You would need to set up a Special Purpose Vehicle as a subsidiary of your main contracting LTD company with the sole purpose of this being to purchase property. The use of an SPV will allow you to transfer money (i.e deposit funds etc) straight from your main LTD company into the SPV without withdrawing this as a dividend. In terms of the tax benefits of using a LTD company to purchase a BTL it would be best to speak with your accountant around these, and they can also work out the figures to see if it is a viable option for you.

It's worth bearing in mind, that LTD Company Buy to Let mortgages can be quite costly - often the interest rates and fees associated with these are quite a bit higher than those for a personal Buy to Let mortgage, however it can save you money in the long run.

[css_jay99]

so what is the advice for someone that can only stump up the deposit for a BTL from LTD retained profits?

Is it also possible to change current property to a BTL? till i get round to moving out at some point in time?

[northernladuk]

so what is the advice for someone that can only stump up the deposit for a BTL from LTD retained profits?

Do a bit of tax planning and exact it via Divis the best way you can. Likey you will have to take a tax hit but IMO you shouldn't let the tax tail wag the dog.

Is it also possible to change current property to a BTL? till i get round to moving out at some point in time?

You can't have a BTL mortgage or agreement when it is your main residence. When you've moved out you can ask your lender for permission to let against your current mortgage but this can cause complications when trying to get another residential mortgage.

[css_jay99]

Likey you will have to take a tax hit but IMO you shouldn't let the tax tail wag the dog.

That's the bit that breaks my heart. So unfair why big businesses and the Elite get away with paying so little