Should your property portfolio move into a limited company? The costs, the tax and the break-even point
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Since mortgage interest stopped being deductible for individual landlords (the finance cost restriction, often called 'Section 24'), many landlords have asked whether they should move their properties into a limited company. A company deducts all its mortgage interest and pays corporation tax at 19%–25%, so the annual tax bill can be much lower. But moving in is expensive: you are treated as selling every property to the company at market value, which can trigger capital gains tax (CGT) and stamp duty land tax (SDLT), the mortgages usually have to be refinanced, and getting money out of a company costs more tax. This workbook puts all of that in one place and compares the two routes over ten years.
See how it works
The sheets you will use most, in the order you will use them – shown with the sample data every workbook comes with.
Step 1
Up to ten properties. What you do: enter the yellow cells.
Step 2
SDLT rate tables, property-by-property figures, SDLT on three bases, CGT for each owner, ERCs and fees, the company's opening position and the s162 checklist. What you do: update the yellow SDLT rates if they change.
Step 3
Ten years for both routes, with every step of the tax shown. What you do: nothing to enter.
Step 4
Net worth advantage and cash break-even year for 30 combinations of interest rate change and rent growth. What you do: change the yellow axis values if you like.
Who it is for
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