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Buy to Let Property – Advantages of Using a LTD Company

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If you’re looking to start building a property portfolio, or would like to add more properties to your current portfolio, then we highly recommend taking a look at a limited company buy-to-let mortgage scheme.

There are a raft of benefits available to you when you hold your assets through a company rather than yourself. Allow the expert team at FC Funding to walk you through them here.

Liability

By creating a limited company with limited liability, you distance your personal life and finances from the fate of your property portfolio. While you would hope and expect that your portfolio doesn’t deteriorate in value, sometimes market factors can have a severe impact on the value of your holdings, in a manner totally out of your control.

In such a situation, only the assets held by the company are at risk, rather than your own finances and assets – protecting the livelihood of you and your family.

Tax Relief

In 2020, buy-to-let tax relief available for individual landlords was cut from 45% down to 20% for top rate taxpayers – but this change did not come into effect for Limited Companies. This means that for those in the top band, tax payable by your limited company will be less than if it was on your individual income, saving you money.

Another benefit of relaxed tax rules regarding property and portfolios is that through a limited company, you do not have to pay any income tax on retained profits that are spent acquiring more properties for the portfolio. This means that you can build you portfolio quicker, and start earning income sooner.

Corporation tax is still payable though, only at the time of writing at 19% – meaning it’s lower than top rate tax as an individual.

Dividends

At the time of writing, no tax is due on dividends of up to £2,000 – in 2016, the Dividend Tax Credit was replaced with tax-free dividends of up to £2,000 for individuals, meaning that you can draw money back out of the company.

You also have control of the personal funds that enter the company. If you provide an injection for mortgage deposits, it can be drawn back through using a director’s loan.

First Commercial Funding are your local Commercial Mortgage and Funding Specialists

At FC Funding,we are one of the UK’s leading brokers, with a vastly experienced and knowledgeable team behind everything we do. If our investment mortgages sound like the perfect fit for you and your portfolio, or you are just exploring your options, why not give our friendly team a call on 01202 937880?

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