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UK Investment Property

When you should buy a property using an LTD company?

We know that Ltd companies make sense in the long term if you plan to buy a large number of properties. But sometimes is better to buy using your personal name if you have 1 or 2 properties under your name and the taxes band will not move if you get this additional income to your current income.

Advantages of using an LTD company to buy a property


You cannot offset the interest on your mortgages as an expense if running in your personal name. This will impact profits 🙂

Your rental income on the first couple of properties is unlikely to cause you any issue since you should not be pushed in to the higher rate tax band and you will still get a 20% of finance cost income tax reducer; effectively putting you in the same tax position as before the finance restrictions came into play. Therefore you will pay lower finance costs, avoid the extra admin and higher professional fees associated with a company by investing privately.

I would agree that keeping it simple and minimise costs to start off with while you develop your knowledge and strategy is a good approach. When your income levels or level of investment mean a limited company makes more sense, then you could look at investing via a limited company.

It is possible to transfer properties from personal ownership to a limited company on a neutral tax basis if you meet certain criteria. However, this comes with tax and legal hurdles (and associated professional fees). This is an area I advise on a lot and I would say that the strategy you suggest appears to work based on the facts provided.

In my experience, choosing a limited company structure from the get-go is most suited to those already paying higher rate taxes and not requiring any income to support their lifestyle from their portfolio or looking at family investment company structures.

Of course, circumstances and tax rules do change so there is no single right answer although it is fairly clear that an incorporated route is probably going to be more costly for you at first. Having a mix of privately owned and corporate-owned properties in the future won’t be detrimental for you based on your current income requirements and the tax legislation in place right now.


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