WHAT ARE THE PROS AND CONS OF INVESTING IN A BUY TO LET PROPERTY VIA A LIMITED COMPANY?

There are many factors to consider when it comes to investing in a buy-to-let property. One option that you may be considering is setting up a limited company and using it as a vehicle for your investment. In this blog post, we will discuss the pros and cons of this approach and help you make an informed decision so you can be rest assured when investing in property in the future.

Pros of Investing in Property via a Limited Company

1) Tax Savings

One of the main advantages of setting up and investing in a buy-to-let property through a limited company is the potential tax savings. When you invest through a company, your income is subject to corporation tax rather than personal income tax which can result in a significant amount of savings. Additionally, the profits from any property sales can be used to reinvest in more properties or pay dividends to shareholders.

2) Separation of Assets

Another benefit of using a limited company is that it provides an extra layer of asset protection. By separating your personal assets from those held by the company, you are protecting yourself from any potential liabilities arising from investments made by your company. This can also help with succession planning, allowing you to pass on your investments in an orderly manner.

3) Property Management

Depending on the structure of your company, you may be able to delegate certain aspects of property management to other employees or directors. This could help to lighten the load and make running a business more efficient.

Cons of Investing in Property via a Limited Company

1) Costs

The process of setting up a limited company can be costly, both financially and time-wise. You will need to pay legal fees and accountancy costs, as well as take time out from managing your investments in order to register the company and complete all necessary paperwork.

2) Monitoring Requirements

If you are investing through a limited company, it is important that you remain compliant with all relevant tax regulations otherwise HMRC may take action. As such you need to be aware of the various filing requirements that must be met and ensure that they are completed on time.

3) Limited Liability

Although setting up a limited company can provide an extra layer of protection, it is important to note that if something goes wrong with your investments, then the exposure may still reach your personal assets if there has been negligence or fraud associated with them.

In conclusion, investing in property via a limited company can offer advantages such as potential tax savings, asset protection and more efficient property management; however the process can also be costly and time-consuming requiring careful monitoring of all relevant regulations. Weighing up these pros and cons will help you make an informed decision about whether this approach is right for you.

It’s worth finding out if investing in buy-to-let via a limited company could be right for you, contact our agents today to discuss on 01252 361555, find out more information about our landlords service here or pop into your local Bridges office.