Why would I buy a property through a company?

There are pros and cons of buying a property through a company, and it may be that there is no clear answer one way or the other. 

The decision will come down to several factors, including: 

• How much income and profits you’ll make from the properties 
• How much you personally need each month as income 
• How many properties you already own 
• Whether the properties are mortgaged 
• Whether you have other (non-property) income and how much 

As well as knowing the pros and cons below, it is always worthwhile having a discussion with a professional. Your accountant will be able to sit down with you and go through your individual circumstances and provide some tax estimates to help you decide. 

Tax liability 

While the corporation tax rate is lower, you will personally be liable to income tax and potentially National Insurance on the income you take from the company, as either a salary or dividend. Therefore overall, the tax liability may not be lower when owning a property through a company.  

Furthermore, the income and any profits will be the company’s and not your own. You cannot take money as you wish, so if you are hoping to use rental profits as your main source of income then the company business structure may not be the best option. 

If you are investing in the longer term and do not require the income from the properties, keeping it invested in the company will mitigate your income tax liability. By owning the properties personally you will be taxed on all profits as they arise. 

Relief of finance costs 

When owning property personally, you are unable to claim mortgage interest as a deduction against income for tax purposes. When owning a property through a limited company, mortgage interest is 100% allowable. 

Accessibility to mortgages 

Owning a property personally may give you access to a greater choice of mortgages. Sometimes properties owned by companies also have lower borrowing limits. 

Stamp Taxes

When owning a property through a company, you will pay higher rates of stamp taxes on purchase and the company may be liable to Annual Tax on Enveloped Dwellings (ATED). 

Changing property ownership 

If you already own several properties personally, it is not simple to move them into a company. You will need to sell them to the company, incurring fees including stamp duty/land tax, legal fees and potentially a Capital Gains Tax liability. 

Read our article for further tips for managing multiple rental properties. 

TaxAssist Accountants can help you with your property portfolio 

TaxAssist Accountants are experts in tax and we deal with lots of landlords who own their properties in a variety of ways. Call us today to arrange a free consultation on 0151 515 3636 or use our online contact form. 

Date published 27 Mar 2024 | Last updated 5 Apr 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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