Buy to Let

how many properties do I need to own to set up as a company?

This is based on rental income and base salary being £79,040. The annual mortgage costs will then by £19,646 for a company and £11,062 for an individual, but the tax bill will only be £9,435 rather than £18,604.

This makes the company’s net income £49,644, as opposed to the individual’s £49,374.

What if I already have an individually-held property empire?

Unfortunately, whether you only own one buy-to-let property or have a large portfolio as an individual, selling the properties and then “repurchasing” them within a limited company is unlikely to work out for you.

To transfer the properties from your own name to a company you will have to sell them, incurring potential capital gains tax. Stamp duty is likely to be payable when you re-purchase inside a business. This makes this method unfeasible for someone with a small number of properties.

Research by Private Finance suggests even those with a large number of buy-to-lets will be better off staying put. An investor with five rentals earning a £90,050 a year in income would have a take-home pay of £53,768 when acting as an individual.

Ordinarily, operating as a company, they would have a take-home pay of £54,584. But once stamp duty and CGT incurred by the transfer are taken into account this would plummet to just £5,374.

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