Tax changes related to property investment

Stay on top of tax changes relevant to property investment

Property investors have seen many regulation and tax changes over the past few years and more are being rolled out in 2020 and 2021. This has created more obstacles for investors but preparing for these changes with plenty of time can make it easier to deal with the changes.


Tax changes for landlords and property investors are one important area to consider. For example, landlords and investors purchasing buy-to-let property as an individual will no longer receive any mortgage interest tax relief for the 2020/2021 tax year. These types of changes are causing many landlords and investors to sell up and leave the property investment sector. However, there are still numerous strategies open to investors to maximise returns.


Is a limited company right for you?


With more changes to Section 24 continuing to be rolled out, setting up a limited company to purchase your buy-to-let properties through could allow you have access to more favourable tax rates. However, buy-to-let mortgages rates are typically higher for limited companies than compared to individuals. It also introduces additional administrative obligations and a reduced choice of lenders.


It depends on your situation on whether it’s worth setting up a limited company, but it’s definitely worth looking into to see if you will make tax savings. It’s recommended to get professional advice to find out if it’s the right move for you.


Foundation Home Loans interviewed 888 landlords online in September 2019 on how they are planning to purchase properties. The research revealed almost two thirds of landlords and investors are planning to buy their next property investment through a limited company. The survey also revealed landlords with bigger portfolios are even more likely to.


Research by the Hamptons International from earlier in 2019 also showed that more than one in 10 rental properties in the UK are owned by private companies, making up an estimated 641,480 properties. This number is a whopping 42% higher than in 2015. This increase in investors using a limited company for their portfolio is indicating that the private rented sector is professionalising.


With the beginning of the 2020/21 financial year creeping up, it’s important to assess if purchasing buy-to-let property through a limited company is right for you. At PropertyMenu, we work with trusted professionals who can provide answers to your queries related to taxes and creating a limited company. Please contact us if you need any recommendations or tips.

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