How does it differ from a standard mortgage?

If you’re buying a property for the sole purpose of living it yourself, then a standard residential mortgage is for you. However, if you’re buying a property to let out, then you can likely save money by buying a rental property and securing mortgage by setting up a company solely for this purpose.

The mortgage you will get is quite similar to a standard buy to let mortgage, however since your company will basically own the property and the mortgage, your mortgage repayments and rental earnings will be treated differently with relates to taxes.

Below are some key advantages in getting a BTL mortgage through a limited company:

·        Taxes – It can be more efficient than personal income, particularly for higher rate earners.

·        Limited Liability – Personal assent won’t be put at risk if things go downhill.

·        Ownership can be shared – You can have multiple shareholders, that makes it easier to manage proportions of ownership and profits.

Transitioning Buy-to-Let property into a Limited Company

Changes in tax regulation for private landlords, there has been an increase in number of buy to let owners pursuing in changing their properties into limited company ownership.

Buy to let properties owned by private companies are considered as businesses, hence expense like mortgage interest and maintenance can be dismissed for tax purposes.

Long term benefits could be important, although in the process of selling and repurchase of property you want to transfer into company owned, the following cost will likely be incurred:

·        Capital Gains Tax

·        Stamp Duty

·        Legal fees

·        Mortgage fees

In various cases, if one can confirm that they are a full time landlord and own enough property to reach certain criteria, then it’s possible to avoid some of the costs listed above when moving buy to let property into a limited company.

In this matter, we strongly advise to seek advice from a tax specialist.