Transferring a buy to let (BTL) property to a limited company is a process many landlords consider to make tax and management planning more efficient. At Key Mortgage Advice, we guide clients through this complex process, ensuring you understand the implications and options available.
Why Consider Transferring Your BTL To A Limited Company
Moving a property into a limited company means treating it as a sale to that company. This can be beneficial if you’re managing a growing property portfolio or want to optimise tax efficiency. Profits earned within a limited company are subject to corporation tax, which is typically lower than higher rate income tax for individuals.
However, this process involved additional costs such as legal fees, Stamp Duty Land Tax (SDLT) at the higher rate, potential Capital Gains Tax (CGT) on any profit made, and arranging a new mortgage for the company. Our mortgage brokers in Preston, Southport and Garstang can help you evaluate if this step is suitable for your circumstances.
How The Transfer Works
Transferring a BTL property to a limited company isn’t the same as simply changing the name on the deeds, it involves:
- Selling the property to the company – This is treated as a market value transaction.
- Registering the property with Land Registry – The company becomes the legal owner.
- Arranging new finance – The company requires its own mortgage, often with different criteria and rates.
Each of these steps has costs associated with it. Early repayment charges may apply on your existing mortgage, and the company may face higher interest rates compared to personal BTL mortgages.
Costs To Consider
Transferring a property involves several potential costs:
- Stamp Duty Land Tax (SDLT)
Charges at the standard or higher rate depending on the property value.
- Capital Gains Tax (CGT)
Payable on any gain from the property’s value increase.
- Legal and professional fees
Solicitors and accountants may charge for the sale and registration process.
- New mortgage finance
Arrangement fees and possible higher rates for a company mortgage.
Our team at Key Mortgage Advice will review your portfolio and provide guidance on which lenders and mortgage products are suitable for your plans. Using our expertise can help you avoid unnecessary costs and identify potential long-term savings.
Benefits Of Holding Properties Through A Limited Company
A limited company structure can offer advantages for landlords with multiple properties or those planning to extend their portfolio:
- Corporation tax treatment – Profits are taxed at the corporate rate rather than personal higher rate income tax.
- Mortgage interest relief – Restrictions that apply to personal BTL mortgages don’t apply to company-owned properties.
- Flexibility for reinvestment – Retained profits in the company can be used to purchase further properties without immediately incurring personal income tax.
However, it’s not always the right choice for smaller portfolios. For landlords with only one or two properties, the costs of transferring may outweigh the benefits.
How We Can Help
Our team of mortgage advisors in Preston, Southport and Garstand provide practical support for landlords considering transferring a BTL property to a limited company. We can help you compare mortgages from over 100 lenders, including specialist company BTL products, and guide you through the process from preparing documentation to securing finance.
We also explain tax and legal implications early, so you can make informed decisions about your property portfolio. In addition to commercial and company BTL mortgages, we offer advice on related services such as buy-to-let mortgages, remortgages and lifetime mortgages.
For quick repayment estimates, you can use our mortgage calculator, or take a look at our mortgage guides to get started. For expert advice, Get in touch with us today on 01772 620000, email us at enquiries@keymortgageadvice.co.uk or fill in our online contact form to book an appointment.
FAQs
Can I Transfer My Rental Property To A Limited Company?
Yes, but it must be treated as a sale to the company. This involves legal registration, arranging a company mortgage, and accounting potential taxes. Our brokers guide you through the process to ensure everything is completed correctly.
What Are The Disadvantages Of Transferring A BTL To A Limited Company?
Potential drawbacks include higher upfront costs, SDLT and CGT liabilities, more administrative work and potentially higher mortgage rates. Professional guidance is crucial to understand these factors.
How Much Does It Cost To Transfer A Property Into A Limited Company?
Costs vary depending on the property value and portfolio size. Legal fees, mortgage arrangement fees, and taxes such as SDLT and CGT should be considered.
