How much would the tax be on below ?
Please base on 2 options private and ltd business thanks so much
800 pcm
Costs
65 managed
70 service charge
Mortgage interest £335
I’d probably say it’d be about twice as much as half.
In either case.
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Need all the variables.
The interest rate would be higher when buying as a ltd.
Your current tax band.
Will you be withdrawing profits
Private owned property, tax would be paid on £7’176 profits. Basic Tax payer 20%, Higher Tax Payer 40%.
Limited Company tax would be paid on £3’960 profits. Corporation Tax 19%.
The main reason you pay more tax on privately owned property is you only get to use 20% of your mortgage interest payments as a taxable expense. With a Ltd Company 100% of your mortgage interest would be a taxable expense against any profits.
If you own property in your own name and the largest percentage of your profits are taxed at the Basic Rate of 20% it is probably not worth the hassle of incorporation.
I am not qualified on tax so please seek professional advice.
Best!
that’s pretty much all the response the OP needs
Erm depends on your tax band.
Plus you will have other costs you can count against your rental income eg the annual gsr and boiler maintenance, costs of advertising and setting up new contracts, any maintenance and repair costs etc
For a co you have costs transfering property to it (stamp duty) if held personally, plus if the co pays you as an employee or you get dividends, you still pay tax on those
There is also the cost of setting up and maintaining a company
Btl mortgage rates may be higher to a ltd co than personally (as ltd co is riskier) and there may be different application fees
Mortgage interest costs can be claimed in full by ltd co. as an allowable expense unlike a private individual
Private individuals pay CGT when selling. A ltd co pays corporate tax
It’s not a simple calculation. Try reading these
And get professional advice.
I am not qualified to advise you on tax
Best