If you're thinking of buying a rental property in the Crawley, one of the first decisions you'll need to make is whether to buy it in your own name or in a company name. Each option has its own advantages and disadvantages, so it's important to consider your circumstances and goals before making a decision.
Buying in your own name:
One of the main advantages of buying a rental property in your own name is simplicity. You'll own the property personally, so there are no complex legal structures or additional paperwork to worry about. This can make the buying process quicker and easier, and can also make it easier to get a mortgage.
Another advantage of buying in your own name is flexibility. You'll be able to choose how to manage the property and how to allocate any rental income or capital gains. You'll also be able to sell the property whenever you choose, without having to worry about company structures or tax implications.
However, there are also some downsides to buying a rental property in your own name. One of the main disadvantages is the potential tax implications. If you own the property personally, you'll be liable for income tax on any rental income you receive, as well as capital gains tax if you sell the property at a profit. This can be a significant amount of tax, depending on your circumstances and the value of the property.
Buying in a company name:
Another option when buying a rental property in Crawley is to buy it in a company name. This can offer several advantages, including reduced tax liabilities and increased protection.
One of the main advantages of buying in a company name is that the company will be liable for any tax on rental income or capital gains, rather than you personally. This can result in a lower overall tax liability, especially if you're a higher rate taxpayer.
Another advantage of buying in a company name is increased protection. If the property is owned by a company, your personal assets will be protected if the company is sued or becomes insolvent. This can provide peace of mind for landlords who are worried about potential liabilities.
However, buying a rental property in a company name also has some disadvantages. One of the main drawbacks is the increased complexity of the buying process. You'll need to set up a company, which can involve legal and administrative costs, and you'll need to comply with additional regulations and reporting requirements.
In addition, buying in a company name can make it more difficult to get a mortgage. Lenders may view company structures as riskier than personal ownership, and may require higher deposits or charge higher interest rates.
In conclusion, there are pros and cons to buying a rental property in your own name versus in a company name. Buying in your own name can be simpler and more flexible, but can result in higher tax liabilities. Buying in a company name can offer reduced tax liabilities and increased protection, but can be more complex and may make it more difficult to get a mortgage. It's important to carefully consider your circumstances and goals before making a decision.
If your are thinking of buying a buy to let and want some free impartial advice, call Ben on 01293552388