Disadvantages Of Buying Property In A Limited Company: Are you making the costly mistake of always buying property through a limited company? Many so-called “experts” tell you it's the only way to go—but is that really the best strategy? In a recent video, I break down the pros and cons of buying property in your personal name vs a limited company. I also reveal the real tax benefits that most investors overlook!
If you want to see the advantages and disadvantages of buying property in a limited company, please watch the full video until the end. You can find the video on my YouTube channel or at the top of this page.
One major reason in favour of buying a property in a limited company is you can claim interest on your mortgage as tax-deductible, which you can’t when the property is in your personal name. This has led many property influencers to claim that you should only buy property via a limited company. In reality, it depends on the property, interest rates, and your personal circumstances.
In this article, I will reveal 3 disadvantages of buying property in a limited company. Understanding these disadvantages will help you make an informed choice about whether investing in property via a limited company is right for you or not.
Do you know people that think investing in property should only be done through a limited company? Why not share this article on your social media pages and get a discussion going? The more people discussing this issue, the better!
1. Disadvantages Of Buying Property In A Limited Company: If You Sell The Property, You Will Be Taxed On Withdrawing The Profit!
If you own a property via a limited company, you don’t own the property, your company does. That means when you decide to sell or refinance the property, it isn’t your money, it's the company's money!
Therefore, if you want to take money out of the company for your personal use, you will need to take a salary or a dividend. Salaries and dividends are both subject to taxation.
2. Disadvantages Of Buying Property In A Limited Company: You Must File Proper Accounts Or You Could Lose It All!
A band member of Pink Floyd bought a property via a limited company, but fail to file accounts. This led to the company being struck off. He then wanted to sell the property, only to come to find out the government now technically own it!
When you buy a property in a company, the company owns the property. You must file your company accounts correctly, or you risk losing your property. Remember, company accounts are harder than a self-assessment tax return, and you will likely need the help of an accountant. This is one of the disadvantages of buying property in a limited company!
3. Disadvantages Of Buying Property In A Limited Company: You Will Have No Privacy!
If you buy a property via a limited company, anyone can look you up on Companies House and see what you own. If you are a public person, like I am, this could be an issue.
People that don’t like you, or media outlets that have an issue with landlords, can easily use this data to try to contact your tenants and cause problems for you. On the other hand, if you own a property in your personal name, there is no way for the public to see what you own based on your name alone!
From The Disadvantages Of Buying Property In A Limited Company To The Advantages Of Property Investing!
Now that you know the disadvantages of buying property in a limited company, it’s time to learn the advantages of property investing! Join me at my next £1 training event!
On the course, you will learn how to:
-
Become a property investor using other people’s money so that you can get started straight away
-
Utilise the 5 different types of raised finance so that you know exactly what to offer and when
-
Find the perfect properties for the BRRR strategy
-
Recycle your money so that you can ‘rinse and repeat’
-
Build a power team you can trust, so that you can save time and money
-
And much more!
Tickets are only £1, and you can get yours here. If you are ready to take action, I hope to see you very soon!