What is a buy to let property?
"Buy to let" is the most well-known form of property investment, and is simply the process of buying a property with the express intention of letting it out to residential tenants. The property can be purchased in full or purchased using a buy to let mortgage, either personally or via a limited company.
Buy to let tax considerations
The ownership structure of the buy to let property determines tax considerations. Buy to let properties are broadly either owned personally or via a limited company, and each ownership structure is subject to different tax rules.
From April 2021, mortgage interest relief is no longer available for personally owned buy to let property, meaning that many investors will experience higher tax bills. Appointing a specialist property accountant, like Provestor, will help you navigate tax legislation and approaches including partnerships, deeds of trust and incorporation.
Many investors are now using limited companies to purchase buy to let properties, as mortgage interest relief is still available. Over 50% of buy to let mortgage applications are now being made via property investment companies. Whilst the compliance burden is higher compared to a personally owned property (as company accounts must be prepared each year), specialist accountants such as Provestor make this process straightforward.
Buying properties through a company is well-established and a straightforward process. If, however, you are looking to incorporate an existing portfolio of personally owned properties, the process is more complex, but we are able to help you understand the business case for doing so.
With any buy to let property, regardless of ownership structure, effective management and treatment of outgoings is imperative as this can impact both the tax you pay on rental income, and also tax on any gains should you sell the property and inheritance tax should you pass the property on in your estate.
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How we help buy to let investors
If you are considering a buy to let investment property we recommend booking a consultation with our team of accountants today. We can help you model and decide the best approach to maximise your returns.
If you have an existing portfolio and have been impacted by the removal of mortgage interest relief (section 24), we can help you to understand the options available to you. Should you wish to incorporate an existing portfolio of buy to let properties, we can help you to understand the returns on this process.
We are also here to support you on a day to day basis. Our team will manage the tax compliance for your portfolio and they will prepare and file your tax returns, including company accounts for company-owned properties.
You’ll also have access to our accountants for tax and business advice, allowing you to ensure your property portfolio is working as hard as possible to deliver your goals.
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