A recent study questions suggests using a limited company becomes viable once you have four or more properties in a portfolio.
When considering moving property into a company it is important to be aware of the following:
But what does that mean in real terms? Private Finance, an independent mortgage broker, has gives two scenarios to help answer that very question.
The first scenario is based upon a landlord with an annual salary of £35,000 and an annual rental income of £11,010. If they buy-to-let under a company structure they would take home 4% less (just under £1400) than they would if they bought it as an individual.
The second scenario is based upon a landlord with 5 properties. Again they have a salary of £35,000 but an annual rental income of £55,050. In their case they would take home almost £1000 more if their portfolio was owned by a limited company.
Although these scenarios are illustrative and support the heightened scrutiny rightly being levelled at holding property under a limited company structure, the fact is the recent changes to the way landlords are taxed means every case needs to be examined separately.
Before you start to consider which would be best for you, ask yourself:
With so much to consider when deciding whether company or private ownership is the best option for you, it is absolutely vital you take specialist advice even if it is only to validate your choice. This is where our team can help.
We are currently advising landlords and property investors on the options available to them. Please contact us if you would like specific advice on the best way to handle your property portfolio.