Should you set up a Limited Company to grow your property investment portfolio?

Since 2017 the amount of companies set up as a mechanism for landlords to hold their properties sky rocketed due to the phasing out of landlords being able to offset their mortgage interest payments against income when filing taxes as individuals, due to changes in mortgage interest taxation.

Should you set up a company to hold your buy to let properties? This is now based on your personal circumstances, and what your future plans are. Are you thinking of expanding your portfolio and how many properties do you currently own?

There are some positives to having a company, companies for example can offset 100% of their mortgage interest payments whereas individuals can only offset 20%. Lenders tend to look more favourably on companies than individuals, as long as there is sufficient history for them to explore, compared to individuals. But the rates offered to companies tend to be higher than rates offered to individuals, with fees generally being higher as well. Corporation tax is charged at a lower rate depending on the company profit, and is lower than personal income tax. However stamp duty is paid at a higher rate for companies purchasing property, and you may possibly pay capital gains tax. As a company owner you have to submit your financial information on a yearly basis to Companies House and HMRC.

There are both pros and cons to setting up a company to run and expand your property investment portfolio. The information provided in this article cannot ever be intended either as financial, tax, legal advice or otherwise and it is highly recommended that you speak to a legal professional to discuss what is right for your personal circumstances in relation to setting up a company.