Commercial Trust, the specialist buy-to-let mortgage broker, is suggesting to buy-to-let landlords that it is in their best interests to seek appropriate tax advice before making the decision to incorporate their property business into a limited company.
According to data from Mortgages for Business, there has been a rise in the interest shown by landlords in using limited companies to manage their buy-to-let portfolios. This is most likely due to this year’s changes to mortgage tax relief and the introduction of Stamp Duty.
This data shows that during the first quarter of 2018, 77% of all buy-to-let purchase applications were made via a corporate vehicle.
It is understandable that recent changes have resulted in landlords reevaluating their options for investment within the private rented sector, but Andrew Turner, chief executive at Commercial Trust, has stated his belief that landlords need to ensure that relevant advice is sought before any decisions are made.
He commented: “Whilst it is understandable that buy-to-let landlords want to avoid paying more tax than is necessary, it is essential, as with any investment, that they fully investigate how their personal circumstances apply to buy-to-let taxation.
“Upon face value, many landlords are perhaps seeing the headlines and are considering incorporating their property investments, as limited companies are taxed differently to individuals.
“However, taxation is a complex issue and I would urge anyone considering this move, to seek advice from a tax specialist first, to ensure that their buy to let venture would actually be better off tax-wise, in a limited company.
“Having done so, we would be delighted to help any landlords that then want to consider investing in buy-to-let as a limited company. There are a wide range of lenders and products that are available and based on individual circumstances.
“But the message should be clear to landlords thinking of taking the limited company option, to investigate fully first.”