Should You Buy Property Under Company Name?

The decision to buy property under a company name or in your personal name is a complex one that depends on various factors, including your investment goals, tax position, and long-term plans.

Here are some key points to consider:

Tax Benefits: Limited companies can deduct 100% of mortgage interest from rental income before calculating Corporation Tax, which is more tax-efficient than personal tax. This can significantly reduce your taxable profits and overall tax bill.
Liability Protection: Holding property in a limited company provides liability protection, meaning that personal assets are not at risk if the company goes bankrupt.
Portfolio Growth: Limited companies can make reinvestment easier, allowing you to purchase additional properties without first paying personal tax.
Succession Planning: Shares in a limited company can be passed on to heirs in a tax-efficient manner, making it easier to manage succession planning.

However, there are also downsides to consider:
Double Taxation: If the company sells a property, it will pay corporation tax on any capital gain, and if you want to extract that money from the company, you’ll pay further personal tax.
Complexity: Limited company ownership comes with its own complexities, such as the need to remortgage, pay for surveys and valuations, and pay Stamp Duty and Capital Gains Tax on the transfer.

Ultimately, the best option depends on your personal circumstances, the size of your portfolio, and your tax position. For smaller portfolios, individual ownership may be simpler and less costly. However, for those looking to scale up, the tax benefits of a limitedcompany often outweigh the downsides.

Shahrouz Mousavi

RM & Co Chartered Accountants

RM Accountants