When you first start to build and increase your property portfolio you may decide to purchase these properties under your own name, or your spouses. While this does keep everything simple there are advantages to putting these properties into a limited company and managing them through a company.
It may sound like a big move or complicated to set up a limited company and become a company director, but it isn’t as hard as you think, and it can make managing your properties simpler. We’ve highlighted some of the key advantages to using a limited company to manage your properties:
- Limited liability: with your properties put into a limited company you can limit your personal liability in the event something goes wrong with the property. This means if the company runs into financial difficulties or if the company is ever held accountable for an accident your personal assets are protected from any claims.
- Tax efficiency: depending on your personal income using a limited company could result in tax savings. As an individual part of your income, including rental income, could be taxed up to 45% depending on your total yearly income. However, by putting the properties into a limited company the rental profits would be taxed through the company as corporation tax, which would be between 19-25% depending on total profits.
- Better access to finance: lenders can be more open to providing finance to limited companies rather than an individual, they may have the view that a company is more stable. This can help you secure funding to increase your property portfolio or for renovations.
- Improved management: by moving your properties into a limited company it can help reduce the stress and time involved in managing a large portfolio. You can streamline the management process and even employ a professional property manager to oversee the day to day running.
- Estate planning: by transferring the properties into a limited company it can be helpful when you’re considering estate planning. When your properties are held in a limited company this can allow for easier transfer to your children or any other beneficiaries.
If you are planning to expand your property portfolio or want to restructure your current portfolio please get in contact.
