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Act now if you want to move to limited company status, landlords advised

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Landlords considering setting up a limited property company should act while the chancellor’s stamp duty holiday is still in force, according to tax experts.

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Setting up a limited company for your property business can make good financial sense as it means landlords benefit from mortgage interest tax relief on their buy-to-let properties.

The downside, is that incorporating ownership of a property or portfolio to the limited company attracts stamp duty land tax (SDLT), which could be a hefty cost.

The stamp duty holiday was announced by the chancellor, Rishi Sunak on 8 July as part of a package of measures designed to kick-start the UK economy following the coronavirus pandemic.

The move means that there is no stamp duty to pay until 31 March 2021 on properties costing up to £500,000. Homes costing more than £500,000 will attract a 5% rate on the part of the sale up to £925,000. The stamp duty holiday means buyers or those transferring property to a limited company could make savings of up to £15,000.

The holiday applies to additional properties as well as to the main residence, meaning savings for landlords, even though they still need to pay the 3% second homes stamp duty surcharge.

Matt Warwick, from property tax specialists MJ Bushell said: “Before the SDLT holiday there had been a lot of debate about whether incorporation is the right approach to take and whether it saves sufficient money to merit the switch.

“Now though, it is clear to see that there is a chance for landlords to take advantage of the higher allowance and lower property prices to expand their property empires.

“Of course, each person’s situation is different, but with a potential saving of £15,000 in stamp duty per property there surely isn’t a better time to re-evaluate your position and consider incorporation. With only six months or less of relief available, investors must act soon.”

Read more about this story on the Property Wire website.

Neil Jennings

Neil is the Operations Director at Assetgrove Lettings, London's Leading Rent Guarantee Company, providing Landlords with no voids, property maintenance, fee-free property management and stress-free service.

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