MikeP;1244 wrote:Dear all,
I am thinking of buying my first buy to let property and wanted to ask other investors for the pros and cons of buying it individually or setting up a limited company and purchasing through there?
- Impact on mortgage availability?
- Taxation issues?
- Legal implications?
- Anything that might crop up?
Regards.
MikeP
Hi Mike.
We have three properties in our property company, all owned outright. We find it easier to keep the books and claim VAT and expenses if the company is ring-fenced from other activities.
If you wish to sell a property and take advantage of the annual capital gains allowance you can always sell a property back to yourself, then sell it on. Obviously care would have to be taken over the valuation.
Do not assume property is easy money. We have five properties in all, including a commercial property, and other properties we are responsible for - about nine in all. Not a day passes without some problem or crisis, even though they are well managed with good tenants.
Do not be taken in by property programmes which show "easy money" being made and high yields. We have been involved in property development etc for over 40 years and have yet to make our fortune. We rented even before the shorthold tenancy act came into being and it was difficult. It still has many problems and the yields we achieve have been nothing like those mentioned on TV. We reckon that, if you properly maintain your investments and include all costs, including considerable running about, phone calls, accountancy costs, finance, etc etc, your return will be nearer three per cent than the much higher sums I constantly see quoted. We have improved, bought, sold and rented over 80 properties so know a bit about it.
I very much doubt we will see capital gains on property in the future, so that can effectively be ruled out of the equation.
Unless you have time on your hands, can do a lot of maintenance work yourself, know about plumbing etc and are prepared to get involved with tenants, you might find it easier to buy good dividend yielding shares. It's a lot less hassle.
