Why consider limited company buy to lets?
Major tax changes recently announced are affecting landlords, but how do these changes relate to limited companies? Many landlords with large property portfolios are considering buy to let limited companies to get around painful new tax laws.
The Chancellor’s recent budget affects anybody who owns multiple buy to let properties. New rules for stamp duty and mortgage interest tax relief are changing the face of portfolios and the economics of buy to let. So what has changed? Well firstly let’s look at stamp duty. In some cases landlords will pay as much as 3 or 4 times more than currently when they purchase a new buy to let property. There are also tax implications as well. Those paying income tax in the top two brackets won’t be able to claim back as much of the mortgage interest. For 40% and 45% taxpayers that means they will pay more tax at the end of the year.
For many this means that it is much more cost effective to run their portfolio as a limited company. Many specialist lenders offer options for buy to let properties through a limited company. We are already seeing new products specifically targeting buy to let limited companies. Some are even offering as much as 80% Loan To Value (LTV). We work with a range of lenders who are able to do this and the advantages are that you can get bridging loans, auction finance, property development finance and much more through a limited company.