11:15 AM, 29th September 2021, About 2 months ago 5
My wife and I are both higher rate taxpayers and currently hold a portfolio of 9 BTL properties in joint names. We are familiar with the four structures that we could use to hold & manage the portfolio:
1. In own names (with declarations of trust/ tenants in common to optimally allocate income etc.)
2. LLP structure (with myself and my wife as individual partners)
3. Limited company structure (with myself and my wife as shareholders)
4. Mixed partnership structure (i.e. LLP with myself and my wife as individual partners together with a limited company partner)
The mixed partnership structure is by far and away the optimal structure for our property business, since:
1. I am self-employed through a limited company, which has built up (and continues to build up) surplus capital on its balance sheet. This limited company would become a partner within the mixed partnership structure and contribute capital towards growing the portfolio.
2. The mixed partnership structure would enable us to continue to borrow at favourable mortgage rates compared with the rates available under an equivalent limited company structure
3. The tax savings realised through allocating profits to the limited company partner (compared with our current situation), could be used to reinvest in growing the portfolio or repaying mortgage debt.
4. I work at least 20hr per week on the property business, self-manage the portfolio and have a ‘growth-mindset’
As far as we are aware, there is only one firm out there that is willing to assist in setting up and administering a mixed partnership structure. Consequently, we are reluctant to proceed since:
1. We do not want to be wholly reliant on this single firm for the foreseeable future
2. It indicates that the structure is not a ‘going concern’ from a tax perspective and sooner or later any tax advantages will be eliminated by HMRC.
If anyone knows of at least two firms that are willing to offer the Mixed Partnership structure, then please let me know. It would give me a lot more confidence to proceed down this route.
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