Trust Deed in favour of Limited Company for tradingMake Text Bigger
I have read many articles on advantages of owning buy-to-let property & related mortgage(s) in personal names, and having a Trust Deed in favour of a limited company to divert rental profits to the Company (20% tax).
I am in the 40% tax bracket with my salary, and my wife is well within the 20% tax bracket.
We have one property – presently owned 90% by my wife and 10% by myself – rental profits are therefore divided 90/10.
We are wanting to purchase a few more buy-to-let properties – to keep long term for income and ultimately to boost pension income. All will be mortgaged.
Should we consider:
- buying in a limited company and mortgaging in the limited company. If so, is it difficult to obtain mortgages – and will we pay a premium interest rate compared to personal mortgages?
- buying in our own names and having mortgagers equally, and then enter into a Trust Deed with a limited company to divert rental profits to the company. If so, could we not draw dividends, and use all profits to merely reduce mortgages to zero for our retirement? . Obviously we would draw dividends when we retire, and then only pay 20% tax. Would the Trust Deeds need to be included on the Land Registry Title Deeds by the solicitor when the properties are registered in our names, or can this be done afterwards? Would any tax advisers/accountants be able to complete the annual property tax returns easily on this basis?
- continue to buy the extra properties on the present basis (90% – 10%) and not bother with the limited company and Trust Deeds? If so, would there be a potential problem with HMRC in any way for the split 90/10?
I am sure that there are many other individuals who have similar questions or have been in a similar position and possibly solved these matters, and I look forward to reading responses.
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