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Buying a Property through a Limited Company

Buying a property through a Limited Company

Buying a property through a limited company is absolutely possible, and there are many reasons why you would do it. Most landlords set up a LTD company as an SPV (Special Purpose Vehicle) for tax efficiency, especially since you are no longer allowed to offset mortgage interest against your rental income as a sole trader. You can read our other article if you are interested to find about how and why setting up a property company works.

Buying a property through a Limited Company

If you are buying property through a Limited company then the purchase will need to go through your LTD company bank account rather than your personal bank account. Any funds that you put into your company will need to be classed wither as an investment or as a Directors loan. Speak to your accountant about the benefits of an investors loan – it’s a great way to get your first company property and you can take the money back within a certain amount of time before tax implications kick in.

Buying a Property at Auction through a LTD Company

If you are buying at an online house auction then you will need to ensure that you specify on the bidding form that your company will be the name on the legal documents. You will also need to give the auction house the company card as the bank card for the deposit rather than your own. Otherwise you are investing your own money into your company and there are implications of this that your accountant will need to deal with for you.

Once you have Purchased your Property

Once you have purchased the property in the company name, discuss this with your accountant as this property is now classed as an asset of the company. You will now be able to receive rental income for the property into your LTD company bank account. You can also offset your interest only mortgage (not capital repayment) against the rental income – something that you can no longer do as a sole trader in the UK. Any remortgages will now also need to be in the company name and not you as a person. You may find that interest rates are slightly higher for companies rather than individuals, and this is one of the downsides to having a property company. However, on the whole, the benefits outweigh the cons.

Can I transfer properties in my own name to my Limited Company?

It is possible to transfer a property from your own name into your company. However, check with your accountant that it is tax efficient to do so. Many landlords keep a couple of properties in their own name until they are about to go over the highest tax bracket on rental income, and put anymore into their company after that. If you want to transfer your own property to your company name you are essentially selling your house to a company as a separate legal entity, and so conveyancing, stamp duty and the usual property sale costs will apply. You will need to sell to your company at market value and not at a discounted rate. You will also need to

Can I receive rental income for my own properties through my Limited Company?

The short answer is NO! You cannot receive rental income for properties in your own name into your LTD company name unless your Company owns the properties and is on the Deeds.

However, if you want to use your company to help you to manage your own properties you can do and there are ways around it. You would either appoint your companies to manage your properties and allow your company to take a ‘management fee’. Alternatively you could have a ‘Rent to Rent’ contract with your own property company. Then your company would pay you basic market value rental income per month and keep the rest as profit. This approach might work well if you rent your house out to your company, but your company manages it as a HMO or Air BnB for further profit.

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Buying a Property through a Limited Company

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