Benefits of transferring your property to a company
Many landlords have found themselves pushed into higher rate tax bands as well as also seeing a significant increase in cost. It has been shown that transferring property into a company can be far more cost-effective.
As an individual you would pay income tax on your rental income. However, if you own the property through a company you would not need to pay income tax. You would pay corporate tax instead. Businesses pay corporation tax of 25% for company profits, when making more than £250,000 profit. As an individual, you would be paying the higher rate of 40%. It can be seen from this that tax is higher for individuals rather than corporations.
You will have enhanced credibility as a company compared to as an individual. A property owned by a reputable company holds a higher credibility and perceived value. This will then attract better business opportunities and higher-quality tenants.
Drawbacks of transferring
If you are transferring your property into a company and it has a mortgage, there could be early repayment fees to be paid. When you obtain a mortgage for your property under your company, the mortgages offered will come with more expensive rates.
You will need to pay Stamp Duty Land Tax, which is important to note. This will usually will be calculated based on the full market value of the property. On Gov.UK it is stated that corporate bodies who purchase residential properties costing more than £500,000 are charged 15% SDLT. This is another large initial financial outlay to consider.
If you are interested in receiving legal advice on this matter, please email nick.attwell@attwells.com. Alternatively contact here, where you will be forwarded to somebody who can help.
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