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Where Taxpayers and Advisers Meet

Is a holding company tax efficient for a property portfolio?

sultanoflondon
Posts:1
Joined:Wed Aug 29, 2018 12:51 pm
Is a holding company tax efficient for a property portfolio?

Postby sultanoflondon » Wed Aug 29, 2018 12:58 pm

Hi all,

For a property portfolio of 2/3 or more properties in the UK, would it be tax efficient to place them all as assets of a holding company that is based in the UK, rather than someone holding them as a buy-to-let investment in their own name? From what I understand, the holding company would pay corporate tax on the profits from the rental properties.

What would be the best way for this to work for an individual? To place the properties in a holding company & draw a salary from the company, whilst being a company director? To only claim expenses such car & phone from the company, but not take a salary? To liquidate the company after some time & take the properties into his/her name when the director wishes to sell the properties for his/her gain?

Thank you!

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: Is a holding company tax efficient for a property portfolio?

Postby AdamS93 » Wed Aug 29, 2018 2:15 pm

You question lack specifics... there is no one size fits all in this scenario.

Some things to think about;

- how will you incorporate an existing portfolio of 2-3 properties - there is no way (in my opinion) 2-3 buy-to-lets will qualify for s162 incorporation relief - therefore incorporation will trigger a capital gains tax liability.
- when the shareholder wants out - there is going to be a double tax charge - one on the sale of the properties and one on the extraction of the cash from the company. Therefore, if you plan on selling the properties in the future incorporating will probably be an expensive choice.

- companies do not suffer from the recent changes to tax relief on mortgage interest
- if all profits are retained then only corporation tax is payable (if you pay salary/dividends then income tax may be payable)

- careful with the 'expenses' - if you only have 2-3 rental properties how are you going to justify a car as an 'expense' - you're best of using business mileage.

You need professional advice on this matter.

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Is a holding company tax efficient for a property portfolio?

Postby SteLacca » Wed Aug 29, 2018 3:33 pm

You question lack specifics... there is no one size fits all in this scenario.

Some things to think about;

- how will you incorporate an existing portfolio of 2-3 properties - there is no way (in my opinion) 2-3 buy-to-lets will qualify for s162 incorporation relief - therefore incorporation will trigger a capital gains tax liability.
And potentially SDLT.


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