Buying property through a limited company: The pros and cons

14 Apr 2023

If you're a landlord, you've probably heard about the benefits of buying property through a limited company. But what are the pros and cons, and is it right for you?
 

Pros of buying property through a limited company
 
There are several advantages to buying property through a limited company. These include:
  • Tax relief on mortgage interest. If a limited company owns a property, you can claim tax relief on the mortgage interest you pay. This can save you significant money each year, especially if you're a higher-rate taxpayer.
  • Limited liability. If something goes wrong with a property you own through a limited company, your personal assets are protected. This means that you can't lose your home or other assets if the company goes bankrupt.
  • Easier to raise finance. If you have a large portfolio of properties, it can be easier to raise finance if you own them through a limited company. This is because limited companies are seen as more creditworthy than individuals.
  • More flexibility. If you own property through a limited company, you have more flexibility in how you use the property. For example, you can rent it out, sell it, or even use it as your home office.
 
Cons of buying property through a limited company
 
There are also some disadvantages to buying property through a limited company. These include:
  • Higher set-up costs. There are additional costs involved in setting up and running a limited company. These costs can be significant, so it's important to factor them in before you make a decision.
  • More complex tax returns. If you own property through a limited company, you'll need to file more complex tax returns. This can be time-consuming and expensive, so it's important to factor this in before you make a decision. We've taken steps to make this easier for our clients with our end-of-year statements.
  • Less government support. If you own property through a limited company, you may be eligible for less government support, such as grants and tax breaks.
 
Should you buy a property through a limited company?
 
The decision of whether or not to buy a property through a limited company is a complex one. There are pros and cons to consider, so it's important to weigh them carefully before making a decision. If you're unsure what to do, speaking to an accountant or tax advisor is a always good idea before making any decisions.
 
Here are some things to consider when making your decision:
  • Your tax rate. If you're a higher-rate taxpayer, the tax relief on mortgage interest can be a significant benefit.
  • The size of your portfolio. If you have a large portfolio of properties, it may be easier to raise finance if you own them through a limited company.
  • Your personal circumstances. If you have other assets that you're concerned about protecting, limited liability may be an important consideration.
 
Ultimately, the decision of whether or not to buy a property through a limited company is a personal one. There is no right or wrong answer, and the best decision for you will depend on your individual circumstances.
 
We offer competitive rates for portfolio landlords and have a dedicated Investment Team who are always helping our clients scale their portfolios. Get in touch with any questions you have, whether that be about how we can help you manage your property portfolio, or scale your investments.

Posted By

Ollie Potten


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