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  • Buy-to-Let

    Limited companies & mortgage interest changes

    Dear all, I am thinking of either selling my 2 of my 3 buy to lets and using the profit to pay off the mortgage of the remaining, thus negating the tax changes on mortgage interest, or I am thinking of transferring 2 or 3 of them into a limited company and had the following questions please:

    1. What is the likelihood of the govt changing its policies on ltd companies in the future and making the mortgage interest no longer allowable against the rental income?

    2. Presumably we will have to clear the mortgages first?

    3. What will be the stamp duty payable if the houses are worth £450k?

    Thanks

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    No one saw s24 and all the other changes coming, so it is impossible to predict the future. However believe it will be harder to make the change for limited company as it will also have impact on other business not dealing with properties, unless the government does a SIC target approach, but it might then be possible for a business to change the SIC, including small change to the business model?

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    I cant full understand why you want to sell your own property to a Ltd Co

    when you have no Mortgage on the BTL property you own in your name

    what are you trying to achieve

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    1. No one knows. The closest we have been too is a Conservative Lord Peer saying that LTD Co BTLs pay enough tax and should retain mortgage interest releif. 
    2. Well no. Its treated as a sale & purchase, the original mortgage (in own name) can be paid back by the new mortgage (in ltd co name).
    3. This is very likely & perhaps capital gains and other costs.

    You should talk to a property accountant.

    Its an interesting plan moving mortgaged properties to LTD Co (where Clause 24 does not count) and keeping unmortgaged property in personal name as there is no mortgage interest.

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    _________________________________________________________________________


    The above post is not financial advice, its often me rambling - passing time on a coffee break.
    If you are looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance.


    _________________________________________________________________________


    The company will have to pay stamp duty at the normal rate plus 3% for a start as the company is buying them.   Then there are legal costs. Then you will probably have to take out new mortgages as required and the limited company mortgages may well be more expensive than personal ones and there will be fees.  When you have added all of that up, subtract it from the amount of tax you expect to save over a ten or whatever year period you intend to hold the properties, and see if it is worth it.

    Alternatively and far better, ask a Property accountant to do the calculation for you.  It's worth paying a few hundred quid for good advice to prevent you losing thousands with a bad decision.  If you intend hanging on to the properties for 20 years or so and buying more, the limited company may be the way to go.  If not it is unlikely that you will be able to amortize your extra costs over a reduced period.  But pay an accountant to work it out for you.  Debbie Franklin at Peplows in Exeter is very good and posts on PT.

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