How do you buy a house through a limited company? Should you buy a house through a company? Watch the video (above) until the end for some dynamite tips about how and what you should claim back from your company when investing in property.
Please note I am not an accountant or a lawyer. This is not financial or legal advice. I am just explaining valuable tips I have picked up through my business journey. Please seek independent advice before taking any action.
In this article, I will explain the three simple steps you need to take to register a limited company and buy a property with it.
1. Pick a name
Don’t spend too much time picking a name. It isn’t that important. A simple way to pick a company name is simply your name or surname plus the word ‘Property’. You can go to a website called Companies Made Simple and search for a name. It will show you if the name has already been taken. If the name has been taken, simply think of another name and search again.
Remember, this name isn’t particularly important especially if you are only using the company to buy a property. If you plan to do other business with the company, it is even possible to trade under a different trading name/trading style (providing you post the correct disclosures on your website and marketing materials).
2. Register your company
Once you have searched for a name on the website, you will be given a number of options to register the company. All names and addresses of companies and their directors are placed on a public register. If you don’t have a business address and don’t want your home address on the register, you can pay a few pounds extra and a mail forwarding address will be provided for you.
The process is very straightforward and you will then be a director of your very own limited company. This will mean that you can benefit from the tax treatment outlined in the video above, and benefit from the limited liability inherent in operating as a limited company.
3. Act as a personal guarantor for the company
As a brand new limited company with no trading history you may be wondering how you can possibly get a mortgage on a property. The answer is you will act as a personal guarantor to the loan. This means taking out a mortgage via a limited company is much like taking a mortgage out in your own name.
Please note however that mortgages taken as a limited company typically carry a higher interest rate, although this is often offset by the tax benefits in my experience. You will normally also need an accountant when filing your taxes as a limited company. It is normally a good idea to have an accountant anyway, as they can assist you with deductions which can help you legally lower your taxes even further.
As you can see, registering a limited company isn’t as hard as it might appear. Good luck with your first property purchase as a company! I look forward to hearing your success stories.