Following the changes to the taxation of buy to let properties many are considering putting their buy to lets into a company. This is particularly relevant for higher rate tax payers who will lose valuable interest relief and in the light of extra 3% of stamp duty from April.
Certainly it may help higher rate tax payers as a company will still be able to deduct mortgage interest when calculating profits and indeed the mortgage market is beginning to realise that they will need to offer mortgages where applications can be made by companies. On the stamp duty hike, it will be companies with 15 properties or more who are exempt from the tax hike. The other matter to be considered is the extra costs associated with a limited company. And, finally the tax position on the eventually extraction of profits from the company and here we have the new dividend tax to consider.
So in summary a limited company would probably be a good option for professional buy to let investors with multiple properties. But the amateur landlord may be better off staying as they are.
Before you make any decision about forming a limited company, you should contact a tax Specialist to weigh up the pros and cons. If you wish to discuss this in more detail, please do not hesitate to contact me.