Buying buy to let through ltd company

gunner786

Hi, looking at purchasing a house through a limited company for buy to let. Purchase price is £290,000. How much stamp duty do i have to pay if through limited company as opposed to through my own name? And what are the pro's and cons as my salary from my job is £51,000

Keep_pedalling

Assuming you are in England a Ltd co would pay £19k, but no idea how much you would pay as you have not provided enough info.

Do you already own a property? If you do, will you be selling it and moving into the new one? Will you be renting out the new property? 

How is this company going to fund the purchase?

gunner786

Keep_pedalling said:

Assuming you are in England a Ltd co would pay £19k, but no idea how much you would pay as you have not provided enough info.

Do you already own a property? If you do, will you be selling it and moving into the new one? Will you be renting out the new property? 

How is this company going to fund the purchase?

No other property. Deposit would be from savings about £65.000. Living with family currently. Will be renting it out

MattMattMattUK

gunner786 said:

Hi, looking at purchasing a house through a limited company for buy to let. Purchase price is £290,000. How much stamp duty do i have to pay if through limited company as opposed to through my own name? And what are the pro's and cons as my salary from my job is £51,000

If you are buying a property through a Ltd company then you need to speak to an accountant to make sure you get things right. If you get it wrong then the SDLT rate would be 17%, or £49,300.

Keep_pedalling said:

Assuming you are in England a Ltd co would pay £19k, but no idea how much you would pay as you have not provided enough info.

Do you already own a property? If you do, will you be selling it and moving into the new one? Will you be renting out the new property? 

How is this company going to fund the purchase?

As it is being bought by a limited company it is irrelevant if the OP owns property or not, what is important is the structure of the limited company.

gunner786 said:

Keep_pedalling said:

Assuming you are in England a Ltd co would pay £19k, but no idea how much you would pay as you have not provided enough info.

Do you already own a property? If you do, will you be selling it and moving into the new one? Will you be renting out the new property? 

How is this company going to fund the purchase?

No other property. Deposit would be from savings about £65.000. Living with family currently. Will be renting it out

You would need to introduce those funds to the business, then obtain a business mortgage. You need to make sure you can actually get the mortgage, so speaking with a specialist mortgage provider first is going to be important. My understanding is that ideally for a commercial mortgage you would want a minimum of 25% deposit, with SDLT and costs not taken out of that, so I think ideally you are going to want at least £75k, then enough on top to cover the first few months payments as well as any potential work needed to bring it up to rental standard (even if no work is required, you still have to have various certifications put in place to be allowed to legally rent it. 

The default for a limited company purchasing residential property is 17%, but this is reduced if the business is structured as a property rental business. The SDLT rate would be 3% on the first £250k, then 8% on the next £40k, so £10,700 in total. They key think is the Ltd must be a property rental business, get it wrong and the 17% rate will apply, so the OP should really seek guidance from a properly qualified accountant. 

In order to be a qualifying property rental business, the business must meet two conditions

• it must be a property rental business as defined in Chapter 2 of Part 4, CTA 2009 (excluding the condition that the profits are chargeable to corporation tax - see PIM1020 onwards for more information), and
• it must be carried on a commercial basis and with a view to a profit.

https://www.gov.uk/guidance/stamp-duty-land-tax-corporate-bodies
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09555
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09835

gunner786

What about private buy to let and not ltd company? If said person is on £50,000 salary. Average rent around here is £1300. Just comparing both options

MattMattMattUK

gunner786 said:

What about private buy to let and not ltd company? If said person is on £50,000 salary. Average rent around here is £1300. Just comparing both options

As a first time buyer you would not pay any SDLT, you would still need a BTL mortgage, still need to have the building up to standard and certified and as a private landlord fewer costs are allowable. You really need to take proper advice on this and do your research. 

I would ask though, as someone who seem to not really understand what you might be getting into, why are you considering BTL rather than another kind of investment?

silvercar

MattMattMattUK said:

gunner786 said:

What about private buy to let and not ltd company? If said person is on £50,000 salary. Average rent around here is £1300. Just comparing both options

As a first time buyer you would not pay any SDLT, you would still need a BTL mortgage, still need to have the building up to standard and certified and as a private landlord fewer costs are allowable. You really need to take proper advice on this and do your research. 

I would ask though, as someone who seem to not really understand what you might be getting into, why are you considering BTL rather than another kind of investment?

A first time buyer seeking a BTL mortgage is going to struggle. Most lenders want BTL borrowers to be property owners not renters.

SDLT_Geek

MattMattMattUK said:

gunner786 said:

Hi, looking at purchasing a house through a limited company for buy to let. Purchase price is £290,000. How much stamp duty do i have to pay if through limited company as opposed to through my own name? And what are the pro's and cons as my salary from my job is £51,000

If you are buying a property through a Ltd company then you need to speak to an accountant to make sure you get things right. If you get it wrong then the SDLT rate would be 17%, or £49,300.

Keep_pedalling said:

Assuming you are in England a Ltd co would pay £19k, but no idea how much you would pay as you have not provided enough info.

Do you already own a property? If you do, will you be selling it and moving into the new one? Will you be renting out the new property? 

How is this company going to fund the purchase?

As it is being bought by a limited company it is irrelevant if the OP owns property or not, what is important is the structure of the limited company.

gunner786 said:

Keep_pedalling said:

Assuming you are in England a Ltd co would pay £19k, but no idea how much you would pay as you have not provided enough info.

Do you already own a property? If you do, will you be selling it and moving into the new one? Will you be renting out the new property? 

How is this company going to fund the purchase?

No other property. Deposit would be from savings about £65.000. Living with family currently. Will be renting it out

You would need to introduce those funds to the business, then obtain a business mortgage. You need to make sure you can actually get the mortgage, so speaking with a specialist mortgage provider first is going to be important. My understanding is that ideally for a commercial mortgage you would want a minimum of 25% deposit, with SDLT and costs not taken out of that, so I think ideally you are going to want at least £75k, then enough on top to cover the first few months payments as well as any potential work needed to bring it up to rental standard (even if no work is required, you still have to have various certifications put in place to be allowed to legally rent it. 

The default for a limited company purchasing residential property is 17%, but this is reduced if the business is structured as a property rental business. The SDLT rate would be 3% on the first £250k, then 8% on the next £40k, so £10,700 in total. They key think is the Ltd must be a property rental business, get it wrong and the 17% rate will apply, so the OP should really seek guidance from a properly qualified accountant. 

In order to be a qualifying property rental business, the business must meet two conditions

• it must be a property rental business as defined in Chapter 2 of Part 4, CTA 2009 (excluding the condition that the profits are chargeable to corporation tax - see PIM1020 onwards for more information), and
• it must be carried on a commercial basis and with a view to a profit.

https://www.gov.uk/guidance/stamp-duty-land-tax-corporate-bodies
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09555
https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09835

There is a lot wrong here!  I have struck out chunks. The purchase is for under £500,000 so the 17% flat rate is not applicable.  The other rates of tax are out of date: for example it is now 5% on the first £125,000.

Assuming the company counts as "UK resident" for SDLT purposes, the SDLT on £290,000 would be £19,000.

SDLT_Geek

gunner786 said:

Hi, looking at purchasing a house through a limited company for buy to let. Purchase price is £290,000. How much stamp duty do i have to pay if through limited company as opposed to through my own name? And what are the pro's and cons as my salary from my job is £51,000

Assuming the company is UK resident for SDLT purposes, then the SDLT would be £19,000.  If you bought personally and have no other properties and the purchase qualified for standard rates of SDLT, you would pay £4,500.  Buying personally could affect SDLT on a future purchase by you.

SDLT_Geek

MattMattMattUK said:

gunner786 said:

What about private buy to let and not ltd company? If said person is on £50,000 salary. Average rent around here is £1300. Just comparing both options

As a first time buyer you would not pay any SDLT, you would still need a BTL mortgage, still need to have the building up to standard and certified and as a private landlord fewer costs are allowable. You really need to take proper advice on this and do your research. 

I would ask though, as someone who seem to not really understand what you might be getting into, why are you considering BTL rather than another kind of investment?

First time buyers' relief would not be available for a buy to let property.

theartfullodger

Hopefully government will dispense with any tax advantages company purchase and operating gets.

Best wishes to all