I was wondering if I should form a company now that I've bought my 2nd Buy to Let property. Is there anywhere I can get free advice on whether to get a property accountant.

Can anyone give me any advice

quote:

Originally posted by JackTZ:
I was wondering if I should form a company now that I've bought my 2nd Buy to Let property. Is there anywhere I can get free advice on whether to get a property accountant.

Can anyone give me any advice

Hi couldn't edit my post. Just to add due to my day job I'm in the higher income tax bracket.

Thanks.

Do you mean open a property based Ltd company ? It isn't clear. Would your properties be your business. If so I was advised NO.

The reason being is this...if your properties increase in value then you have to pay tax on the increase regardless if you sold them! So you would be seriously out of pocket by the end of tax year assuming this is the case. However, have a look at opening a trust. I don't know the ins or outs but you could open a trust with the assets being invested for your future pension purposes.

Speak with a professional accountant. I just thought I'd put my own thoughts on this just because I am looking at investing in property. Good luck, I'm sure you will find a way to be more tax efficient.

Hi Fay1234,

Thanks for your advice. I haven't heard of having to pay tax on price increase regardless of selling.

My assupmtion was that if I formed a company I would pay 30% tax overall on my rental profit instead 40% on each property separately.

Still I really shuold get advice from an accountant.

Many thanks

JackTZ

Why are you looking to start a LTD company for your BTLs?

The benefits would be: If you had your BTLs repossesed it would effect you.

But it would be unlikely a mortgage lender would allow this (assuming you have a mortgage) as they would the final liability to be with you, and not a limited company.

With regards to tax, you could offset rents against mortgage payments, but you can do this anyway. The only benefit with a LTD (other than above) is that you could then pay yourself dividends, which are taxed less. But this is alot of hassel...

Hi F_T_Buyer,

It's just that 40% tax on my rental income is a hell of a lot. BTL's aren't really a short term money making thing I know, but I would like to have some reward from the rent!

If I formed a company and paid less tax, then I would be able to save up for a deposit for another property, or at least for the associated fees and initial mortgage payments until the lettings feea are paid.

At the moment, I want to remoertgage one of my properties to release equity to put down a deposit for another property; which is great. However I'm can't, as most of my profits will go to the taxman, and can't afford the initial mortgage payments etc, and so am lossing the ability to make some some money etc.

I wish an actual accountant would look at this and give me some advice etc....

lol

quote:

Originally posted by JackTZ:
I wish an actual accountant would look at this and give me some advice etc....

So why not just pay for one to advise you?

As you say, the financial consequences of the options are quite different and so you need to get the best advice.

Spending a bit on an accountant may well more than pay for itself. It's a false economy not to, in my view.

Hi Vbland,

Yes I will do that. Though I've got plenty of time. I don't have to do any tax returns for a good few months yet. Plus as I've just got in new tenents I'm a little strapped for cashflow etc.

Was just hoping that someone could give me some good advice in the meantime etc. or even recommend me one!

Cheers

Jack.