Becoming a business rather than a landlord

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    Becoming a business rather than a landlord

    Hi all,
    Just a quick question. I've read that many landlords are now registering as a business rather than staying an individual landlord. Question is, what is the advantage/disadvantage of this and why do landlords do it?

    #2
    The number one reason (I believe) is because they've read that lots of landlords are doing that.

    The main reason for considering it is tax.
    Business can claim all of their interest against income for tax purposes, while private individuals have a limit on how much they can claim (which doesn't affect everyone).
    For a limited business any increase in property value is income, not a capital gain - which changes the tax treatment.
    Corporation tax is lower than income tax (but there are no personal allowances).

    You need to consider the cost of switching for any existing business, and how you plan to get money out of the company, both routinely and at the end.
    Many people find out that they're essentially being taxed twice - once as a business and once personally, when they extract money in some way.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

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      #3
      Thankyou. That makes sense.

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        #4
        If your annual income from job plus profit from rental income exceeds £50K, your tax will be charged at 40% on the income above £50K. .
        Since 2016, for property held under personal name, the mortgage loan interest is no longer an allowable expense against rental income.

        If your properties are held inside a Limited Company, the company pays corporation tax at 19% on annual profit.. For the limited company , loan interest is an allowable operating expense against the rental income.

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