Limited company buy-to-let is the only way to buy?

Research found that only 17% of landlords with one to three properties plan to use limited company status. This makes perfect sense to us. Landlords with one or two properties can still be professional but their financial situation is likely to be very different from portfolio landlords with 100 properties.

Landlords who’ve opted to use buy-to-let as part of their pension planning; setting up and running a company for this type of landlord is almost certainly not going to be the right approach.

Tax advisers will consider their income position all around, as well as the income position of their partner and if overall income is less than £100,000 between partners, a limited company may not offer any financial benefit. Basic rate tax is now payable up to £50,000. A couple’s combined allowance is therefore £100,000.

That means the ‘loss’ of tax relief may not hit them – as even when the full changes come in, they will still be able to claim a tax credit of 20%. The change in regime does mean this is applied to revenue not profit as tax relief has been, but nevertheless, that’s a sizeable level of income annually to earn.

While this is oversimplifying the scenario considerably, what this highlights is just how important it is for landlords of all shapes and sizes to take professional tax advice from a specialist as well as taking mortgage advice from their broker.

If you would like to know more about a new or re-mortgage please do make contact and one of our advisers will be happy to assist.