If you’re new to UK property investing, you’ve probably heard the common advice that you absolutely must buy investment properties through a limited company. But is this genuinely the best approach? Or might it actually be simpler and more beneficial to buy properties in your own name?

The truth is, making the wrong choice here could cost you thousands each year and potentially create significant complications down the line. Let’s break down the advantages of each option to help you make an informed decision.

Why Consider a Limited Company?

A few years back, the UK government introduced something called Section 24, which restricts landlords from deducting mortgage interest from taxable income on properties held in personal names. Essentially, if you own property personally, you can no longer offset mortgage interest payments against your rental income. This change is particularly harsh for higher-rate taxpayers, substantially increasing their tax bills and reducing overall profits.

On the flip side, investing through a limited company still allows you to deduct mortgage interest payments before tax, significantly reducing taxable profits. This is a major advantage, particularly if you aim to scale your property portfolio rapidly.

Moreover, limited companies offer greater flexibility for inheritance tax planning. You can distribute shares among family members, facilitate smoother transfers of wealth, and legitimately employ family members to help manage tax liabilities effectively.

Given these benefits, it might seem obvious to invest through a limited company, right?

Advantages of Investing in Your Own Name

However, buying in your own name does carry notable benefits too:

• Lower Mortgage Interest Rates: Generally, mortgages for properties held personally have slightly lower interest rates compared to those held by limited companies, potentially saving you a significant sum annually.

• Simpler Mortgage Application: Getting a mortgage personally tends to be easier, with a broader selection of lenders competing for your business.

• Reduced Accountancy Costs: You avoid the additional compliance costs associated with maintaining company accounts, simplifying your financial management.

• Greater Privacy: Properties held personally offer more privacy compared to those held within a limited company.

• No Mortgages, No Problem: If you’re buying properties outright without a mortgage, the restrictions of Section 24 become largely irrelevant, reducing the benefits of limited company ownership.

What’s the Right Choice?

There’s no universal answer here. The best route depends entirely on your specific circumstances:

• Your strategy and objectives: Are you planning to build a large portfolio or just acquire one or two properties?

• Financing: How are you funding your purchases?

• Partnerships: Will you be working alone or with others?

• Exit plans: Are you investing for long-term growth, regular income, or eventual resale?

• Inheritance: Do you intend to pass your portfolio down to family?

• Reinvestment: Will you reinvest your rental income into stocks, precious metals, or let it grow quietly?

Because these factors vary widely between investors, taking general advice from YouTube or social media—even from me—isn’t wise. Instead, the best step you can take is to consult with a property-savvy accountant who can provide advice tailored specifically to your situation.

Before speaking to an accountant, ensure clarity on all the points listed above. Your accountant can only offer genuinely beneficial advice when they fully understand your situation.

My Final Recommendation

Simply put, ignore generic online advice and invest in professional guidance from an accountant experienced in property matters. It will undoubtedly be some of the best money you ever spend on professional advice.

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