Limited company buy-to-let mortgages
- A unique opportunity exists in buy-to-let for limited company owners
- Using your Ltd Co. or SPV can have tremendous tax advantages
- Before buying in your own name as a private landlord, talk to us!
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If you own a limited company, you can choose how to pay for your rental property. You can:
- Take out your buy-to-let mortgage as an individual, after tax, or
- Channel the transaction through a limited company.
There are pros and cons to both. But changes affecting buy-to-let tax can make a huge difference to your profitability. Firstly, since 2020, landlords can’t claim as much relief against their mortgage interest rate. Secondly, Stamp Duty has increased on a landlord’s second (or more) homes.
Putting buy-to-let mortgages through a limited company
The most recent buy-to-let tax changes encourage going the limited company route. The problem there is getting the mortgage in the first place. How do you expect a generic mortgage advisor to understand limited company ‘income’?
All advisors must, by law, verify you can afford the repayments before they’ll let you buy a second property. When a non-specialist advisor looks at contractors’ accounts, they often struggle to see beyond salary and dividends drawn. Therein lies the problem.
Instead, you need to approach a broker who specialises in non-standard mortgages and irregular income. They’ll be able to see that your affordability lies within your limited company. Moreover, they’ll also be able to help underwriters see what you can truly afford.
What are the benefits of a limited company buy-to-let?
The 2020 change to buy-to-let tax relief didn’t affect everyone. Predominantly, the reduction in what landlords could claim against tax impacted individuals who were higher-rate taxpayers. That meant they saw relief drop from 45% to 20%.
What the change didn’t affect was limited company buy-to-let mortgages. So, by owning your rental property in a limited company—an SPV—you’re only liable for corporation tax. This helps higher-rate landlords with property portfolios to make significant savings.
There’s a good chance you’ll have more questions about using a limited company to buy a rental property. Our experts know both sides of the equation, inside and out. You can talk to one now on 0208 421 7998, or send us your enquiry here.
We’ll search the whole market to find the best deal for your unique situation. Then, if you’re happy with the quote, sit back, relax and we’ll do all the hard work for you.