TAX TIP OF THE WEEK - Does owning a buy to let property through a company always save tax?
With the introduction of the S.24 mortgage interest relief restriction coming in a few years ago, the standard practice seems to be purchase any new buy-to-let via a Ltd co structure.
However this isn’t always the best course of action, for example, if you were looking for a regular income from the rental profits then you will end up paying corporation tax as well as personal tax. So could actually be worse off than owning personally.
If your intention is to accumulate any cash the property generates with a view to re-investing or as a retirement fund, then the company structure offers some major tax benefits.
Not only would you shield yourself from the 40% tax bracket, when it eventually comes to your retirement you could draw the income at lower tax rates.
Any sale of the property would also be chargeable to a lower CGT rate with additional allowances for properties purchased before 2017.
So in summary as long as you don’t need a regular income from the buy to let then the company route is most likely to save the most tax.
Hope this was helpful, for lots more tax tips and strategies get a copy of our 71 ways to save tax checklist https://bit.ly/2YQbhvr