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Buy-to-Let Property – Limited Company or Own Name

Thinking of buying a buy-to-let property?

We will always say that a borrower should talk to their financial advisor or accountant when considering whether or not to purchase an investment property in their own name or through a limited company. You need to ensure that the structure is right for you in terms of taxation, income and other factors.

But we have seen a clear increase in purchases through a limited company over the last several months. Why is that?

It’s probably driven by two main factors.

The Government increased the amount of stamp duty payable on properties for those who own more than one. This has created an incentive to purchase future properties in a company name.

And secondly, the fact that from the tax year 2020-2021, no finance costs can be deducted from investment property income if the property is held personally. (This has been phased in over the last few tax years).

Both of these factors have resulted in an increase in investment property purchases in limited companies. But there are still lenders able to provide finance for both scenarios – it is about securing the right deal for the borrower.

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