More and more investors in British real estate “buy to let”, try to change the ownership to “limited liability company” to 2017 to big savings on taxes. More proposals on mortgage lending for buying property in England comes from societies, but experts believe that this strategy has both advantages and disadvantages and are strongly advised to consult with experts before taking the decision to change the form of ownership.
The share of individuals who applied for mortgage investors – companies was in the 4th quarter of 2016 69%, which 6% more than in Q3.
But it is much more in comparison with the 3rd quarter of 2015, when the share of companies in the market of mortgage lending of property in the UK “buy to let” was only 21%. The reason for such a jump – the abolition of tax exemptions for mortgage loans for individuals, which came into effect in April 2017 and announced in 2015.
Many investors in residential property in England thought it more profitable to pay “income tax companies”, the so-called “corporation tax” than a high “tax on income of physical persons”, “income tax”.
Another advantage is the possibility of reducing costs through loans from the founder that are returned without taxation.
But there are drawbacks in the case of companies for management of investment “buy to let” . For example, companies are unavailable a deduction for “tax on capital gains,” which is available to individuals in £11100 in the case of a sale of the property. And of course, do not forget that the content itself of the company to the owner imposes a number of financial and moral obligations . So, it is necessary to keep accounts, to periodically submit reports to the tax office and bear the official expenses. All of this should be considered an investor who chooses, what form of ownership is preferable for him.
® Helen Entree. 10.01.2017 G.
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