Tax effect if I incorporate my lettings business?

[Holmes1981]

Hi,

I have six flats which are rented out. I am considering becoming a Limited company and transferring the flats, which are currently in my own name, which have buy to let mortgages outstanding. (interest only).

I am wondering what others do with a simlar portfolio sizes, my fixed assets current MV is about £600,000, which mortgage debt of approx £400,000.

Also, is it easier to obatin finance through a Limited company as opposed to a sole trader, are there better deals available..

Thanks in advance

Craig

[Telometer]

Too difficult a question to answer in less than a five page letter, really. Depends on what you want for your business. Personally, I wouldn't bother. The admin (filing accounts, etc.) and risks of double tax charges (once in the company, and once when distributed to you) make companies hard work.

[Holmes1981]

thanks for the reply..

The two things that made me think are:

1) Limited liability, I comply with all the legislate and safety regulations, but didnt want to be sue'd personally and loose my personal home and assets should something go wrong.

2) Is finance cheaper thorugh a comapny, as the lender will see a healthy balance sheet and see less risk than a sole trader.

Cheers

[King_Maker]

Incorporating your rental business could land you with a CGT and SDLT liabilities - it might have been different if you were just about to start the business.

As a broad generalisation, a company is better at sheltering income, whereas an individual is better off CGT-wise.

Personal finance has been cheaper than company finance in recent years - might change with the current credit crunch etc.

[Holmes1981]

thank you for reply..

[Telometer]

With corporate manslaughter etc. I don't think you would find it makes much difference. With decent insurance, and decent letting agents, you should not have much worry on that front.