Buy to let properties – to have and to hold?

Buy to let properties continue to be a popular investment choice, a question often asked of accountants is, whether it is more tax efficient to invest in a buy to let property within a limited company or to hold the property personally? The answer is, as is often the answer to many tax questions…. It depends….

The choice has become less clear since the change to stamp duty rates for second properties in 2016 and the upcoming modifications to the tax deductibility of mortgage interest being phased in next month. There are more variables than you can shake a stick at; some are:
• Your current levels income and tax – there may be a tax advantage extracting the profits via a company
• Intended use of the profits – are they needed immediately or will they be reinvested?
• How will it be financed? There is a better choice of mortgages available to people over companies, however companies will continue to benefit from being able to deduct whole amount of mortgage interest against it’s corporation tax
• The extra administration of running a limited company will not be for everyone.

If you have just found the perfect buy to let property it is well worth doing some number crunching first to find out which type of ownership structure suits you.

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