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Can a Company Buy a Property?

Can a company buy a property?

Can a company buy a property? If you are a contractor or a business owner, you may have considered buying property through your business. However, you first have to look at the advantages and disadvantages and seek professional guidance  – we are always happy to offer impartial advice, to find out more call us, Greater London Properties, London’s largest independent estate agent on 020 7113 1066.

Advantages of buying through a company

There are a couple of financial reasons why you might choose to buy through a company. The first is rental income will be taxed differently. If you own a property as an individual, then the money you will get from rent will be taxed. It will taxed as income tax. If you choose to invest a property, the profit will be liable instead to Corporation Tax. This is, at the moment, 20% of profits adding to £300,000 or less. This can make a huge difference if your income tax is at 40% or more.

Disadvantages of buying through a company

One of the main issues is finding a suitable lender. This is because, most buy-to-let lenders will not let to limited companies. If they do, they will want a personal guarantee from the directors. By doing this, the lender will have recourse to the director personally in the event the company defaults. In this case, additional legal costs and taxes would be due to transfer the property back to you.

It might be possible to get a commercial lender but it might result in higher interest rates and lower loan-to-value ratios.

The questions that you will have to consider

  • How much income tax do you pay?
  • How much money do you have?
  • What is the investment for?

We hope this answers your question ‘Can a company buy a property?’.  If you are looking to buy a property in Central London, please visit Greater London Properties, Central London’s largest independent estate agent or call us on 0207 113 1066.

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