Buy to Let Portfolio to a Limited Company

/ AIMS, Business and Economy, SME, Tax

Author: Henry Ejdelbaum

Tags: buy to let, buy to let properties, Capital Gains Tax

buy to let portfolio title image

If you own a Buy-to-Let portfolio, you might be able to save on tax by holding the properties through a Limited Company.

Whether or not this is right for you depends on lots of factors, such as the number of properties, the level of commitment and potential risks.

If you currently only own one or two properties, it might not be best to hold them through a Limited Company as the costs can exceed the possible benefits.

Incorporating means you will have to sell the property to the new Limited Company and this could mean:

  • Stamp Duty Land Tax costs
  • Capital Gains Tax (CGT)
  • Mortgage costs such as fees for taking out a new loan and early repayment charges if you do so

It’s a personal choice, but you might want to consider holding your properties through a Limited Company if:

  • You are a higher rate taxpayer because by using a company you can mitigate tax through dividends. Individuals, on the other hand, are subject to income tax immediately
  • You don’t need the income from the Limited Company in the short term
  • You wish to reinvest the rental proceeds to grow your property business, and it makes sense in the long run

Every situation should be looked at individually by a qualified accountant. Your local AIMS Accountant can structure a financial strategy that could provide better returns on your portfolio, so get in touch here.