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  • Tax

    First time Buy-to-let. Company or Individual?



    Hi All,

    I am totally new to property investment and I have some questions I hope you can help me answer.

    I have about £180,000 saved up for investing in buy-to-let property. I aim to purchase 2-3 properties outright by end of this year. No mortgage.

    I was reading that a lot of investors are setting up companies to run their BTLs but I am not sure if it gives me an advantage. I want to get started as soon as possible but I can't decide whether to purchase as an individual or set up a limited company.

    1) Are the any advantages to setting up a Limited company as opposed to buying these properties as an individual?

    2) In terms of paying myself the rental income which would be better?

    3) Which is better in the long term with regards to inheritance and capital gains tax?

    Thank you for your help!

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    Hi Phil,

    Welcome to the tribe. Smile

    Landlords are mostly setting up limited companies to mitigate the effects of Section 24.

    As you are buying for cash, and not taking out BTL mortgages, then you will not be affected by S24.

    Therefore, in my opinion, you would be better off buying in your own name. You will have access to a wider range of mortgage products, and will be able to benefit from the rental income on a monthly basis.

    See - The BIG tax issue: Should I incorporate? 

    As ever, it's very personal to you, and you would be sensible to seek professional tax advice specific to your situation.

    Another thread of interest to you, which I would recommend you read is:

    Top 10 Property Tribes resources for novice landlords and BTL investors 

    ​Good luck!

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    Thanks Vanessa! Will have a good read through the links you posted.

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    Much of the information you require is dependent upon your financial circumstances as a whole and not just the purchase of these properties.

    The first thing you should do is chat to a Property Tax expert who can assess your position and provide you with a professional assessment of what is best for you.

    Once you have knowledge of the structure that will suit your immediate and longer term plans speak to a Broker like myself who can then find the best product to match that structure.

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    Mr Mark Alefounder

    Mortgage & Protection Broker

    Optimum Independent Financial Advisers

    Mobile 07716 647 928

    Tel: 01206 366700

    http://www.optimum-ifa.co.uk

    The financial regulator, the ‘Financial Conduct Authority’ designates that there are two different types of financial advisers, ‘independent’ and ‘restricted’. The status of an adviser firm will affect the type of advice that is given. A restricted adviser firm can only recommend certain products or product providers, whereas an independent adviser firm, such as Optimum, is able to consider and recommend all types of retail investment products and/or providers that could best meet clients needs and objectives. Optimum Independent Financial Advisers offers genuine unbiased and unrestricted advice.

    Your home may be repossessed if you do not keep up repayments on your mortgage.

    Optimum Independent Financial Advisers is authorised and regulated by the Financial Conduct Authority

    Financial Services Register Firm Reference Number (FRN): 223293

    © Copyright 2017 Optimum Independent Financial Advisers. All Rights Reserved


    Thanks Mark, do you recommend a Property Tax expert?

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    One thing I would consider, whilst S24 might not affect you now as you are paying cash, you might want to consider its effects on you in the future if you do decide to leverage your portfolio further down the line.

    Decisions made today can restrict your options tomorrow.

    Mark is correct though proper tax advice from a specialist is a must.

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    Landlord with 25 years’ experience in the property market and a specialist in tenant referencing ID and credit screening. Creator of identity, credit and anti-money laundering system ValidID.co.uk


    Thanks Chris, can you recommend a specialist?

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    I have a Chartered Accountant here in my building and her an I work together to get through the complexities of the tax system as it applies to my situation.

    However it would be inappropriate for me to recommend anyone but Rental Income Tax Advisors (RITA) who as Vanessa has pointed out have a relationship with PT.

    Whatever you decide to do, I would always strongly advise you to learn as much as you can yourself because, above all, the more knowledgeable you get with your own situation the better professionals can help and advise you.

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    Landlord with 25 years’ experience in the property market and a specialist in tenant referencing ID and credit screening. Creator of identity, credit and anti-money laundering system ValidID.co.uk


    Lots of good advice above

    You need to think hard for the future

    If you intend to purchase more property I would set up a company and give your company your cash and buy without a Mortgage from day one

    If you only intend to buy properties in future with out Mortgages do it in your own name

    Or do a mixture of both spread your risk

    it all depends on your own goals but Flexibility in my book is not a bad thing and always have a plan B or C

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    Learn Change and Adapt ?????


    Thanks. I am a bit confused with this response. They sound the same, so are you recommending both?:

    If you intend to purchase more property I would set up a company and give your company your cash and buy without a Mortgage from day one

    If you only intend to buy properties in future with out Mortgages do it in your own name


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    BTL is full of twists and turns

    your requirements for the Investment may be very different from the ones you will have in mind in the years to come

    So that's why I say be flexible as you can

    Buy in Both your own name and a Company formation

    it doesn't have to be one or the other

    Property investment is in general a long term investment so treat your plans the same way

    Unless you are flipping buying and selling


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    Learn Change and Adapt ?????