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  • Tax

    Personal Name, Limited Company Or Both?

    Imagine this scenario..

    Assuming no other income for tax purposes..

    Could one potentially hold BTL property both in ones own name and in a limited company for purpose of tax efficiency?

    I mean due to S24 could you potentially hold 4-5 properties in your own name to take you upto the higher rate tax bracket and then register additional properties acquired later in a limited company for tax efficiency maybe?

    Or is it beneficial to register as many properties in the limited company from the beginning?

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    ManInTheMoon

    There are pros and cons to having property in personal names and in a company. Each person’s situation is different but from what you’ve said the following is the generalised perceived wisdom.

    Have as many properties in your personal name as possible without becoming a higher rate tax payer. Once you’ve reached this limit then put any new purchased properties into a company. It is absolutely fine to have properties in personal names and in a company. Once you’ve got a company you can always transfer your personal properties into the company if needs be but you will need to take account of stamp duty and capital gains costs etc. I have no intention of putting my personal names houses into a company.

    Having properties in a company as a basic rate tax payer will leave you with less money in your pocket. The company route is only really a viable option for higher rate tax payers.

    It sounds like you’re just starting out so my advice would be to start buying in personal names and not worry about the company side of things as you are not yet in a position for it to be an issue for you.
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    Thats what I had figured out myself although I hadn't seen it spelled out so thanks for confirming exactly that :-)

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    ManInTheMoon

    Also think about the future. Property is long term and there you need to plan for long term. If you have n income now, how will you be able to buy properties?? It is very hard if not impossible to get mortgage without income
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    I have lots of savings and investments from my previous and current small businesses. I do have some income now but my business isn't booming like it was previously. I managed to save quite a bit during the good years which I can now use to fund another small business or investment, i.e. property.

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    ManInTheMoon