What is a limited company buy to let mortgage?
When you own a BTL personally, you pay income tax on rental profits and since Section 24, mortgage interest is no longer fully deductible. Higher rate taxpayers were hit hardest.
A limited company (SPV) pays corporation tax on profits and mortgage interest remains fully deductible. For higher-rate taxpayers with multiple properties, the annual tax saving can be substantial.
Who benefits most?
Limited company ownership makes most sense if you are a higher-rate taxpayer, building a portfolio of 2+ properties, reinvesting rental income rather than drawing it out, and planning long-term.
It makes less sense for basic rate taxpayers, those planning to sell soon, or single-property landlords where fixed costs are harder to absorb.
The real costs of restructuring
Moving property to a limited company is not a simple remortgage - it is a disposal and acquisition. The company pays SDLT including the 3% surcharge. On a 400,000 property SDLT could be 22,000-25,000.
The disposal may also trigger Capital Gains Tax personally. Add two sets of legal fees and a new mortgage arrangement fee. For landlords with large portfolios these costs can pay back within 2-3 years - for others the maths may not work.
Roger Cooper
CeMAP Qualified Mortgage Adviser | FCA Regulated
Roger has over 15 years of experience as an independent mortgage adviser. CeMAP qualified and FCA regulated, he specialises in complex mortgage cases including self-employed applicants, portfolio landlords, expat mortgages and high-value purchases across Greater London and the Home Counties.
All advice provided by Mortgage International is given by CeMAP qualified advisers regulated by the Financial Conduct Authority.