Their research shows nearly two thirds of landlords plan to expand their portfolio by using limited company status. This is compared to just 21% who intend to buy property as individuals.
Across the market as a whole, 44% of landlords will buy using limited company status. There are a number of financial benefits for this. For example, rental profits are taxed at 20pc if they are less than £300,000 a year. Therefore, any profits can be reinvested in new properties with relatively mild tax rates. This is far more tax-efficient for portfolio landlords.
As the phased reduction of mortgage interest tax relief continues, limited company status has grown in popularity. This is because it is unaffected by the reduction, with landlords offsetting mortgage interest against profits. These are subject to 19% Corporation Tax instead of income tax rates.
“The buy-to-let market is changing," explains Alan Cleary, managing director of Precise Mortgages. "The switch to greater use of limited company status is one aspect of the development underlining the increasing maturity of the sector."
“There are good reasons why limited company buy-to-let is dominating the purchase market and we expect that will continue to be the case this year and next."
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