Advantages Of A Property Company.

[pattricia 574]

My nephew owns 3 houses , not counting the one he lives in. He rents these off , and is thinking of buying more in the future, but after talking to other landlords he finds that some have formed property companies. He is a newcomer to the renting business so does not know much about property companies. What are the advantages, tax wise etc; of forming a property company. Any advice from landlords or solicitors etc; would be much appreciated so I can pass this advice on to my nephew.

[Jeffrey Shaw 88]

Best to start by asking his Accountant.

Look particularly at Capital Gains Tax, Inheritance Tax, and SDLT.

Also: are the houses mortgaged? If they are, he'd need to consult the mortgagees [lenders] or arrange for the Co to purchase [inc. discharging existing mortgages] and create new mortgages.

[pattricia 574]

No mortgages to pay Jeffrey, but I shall pass the rest of your information on to my nephew. Thank you so much !

[dan2802 53]

He needs to talk to his accountant. It really is that simple.

[pattricia 574]

2 hours ago, dan2802 said:

He needs to talk to his accountant. It really is that simple.

Thank you Dan. He will be glad it’s simple.

[Jeffrey Shaw 88]

It's not- but certainly such advice should be a first and principal step.

[topflat29 10]

 

Companies pay 19% corporation   tax on annual profits . 

Mortgage Loans  is  usually  at higher interest  rate  for companies  but  is fully allowable operating expense against the rental income.

Companies required to  prepare and file annual accounts to Companies House as well as submit  tax return to  Tax Office.

Accountant charge for preparing accounts.

 

Persons pay 20%  and 40% tax on any annual  rental income above  the personal allowance of  £12,500. 

Liable for capital gains tax after sale of property.

Mortgage interest rates are lower  than for companies.  

Loan interest is not an allowable expense against rental  income  but 20% of interest may be offset against the  annual tax.

[Jeffrey Shaw 88]

On 26/08/2021 at 19:09, topflat29 said:

 

Companies required to  prepare and file annual accounts to Companies House as well as submit  tax return to  Tax Office.

Small companies may apply for exemption from full audit requirements.