Interested in property investment: as individuals or under a company?

Investing in property is one of the most common ways to make money. Whether it is property flipping, HMOs or rent to rent the possibilities are endless for turning a profit.

The question then is should you invest in property as an individual or under a company? In this article we look at the advantages of both.

Investing as an individual

Investing as an individual can provide you with financial security and it can help secure your long-term future. The lure of investing in bricks and mortar offers more stability than say investing in shares.

This is one of the reasons that banks are more willing to lend people money to invest in property rather than in the stock market.

Another reason for investing in property as an individual is the tax advantages including the ability to manage the costs often associated with investing.

Many deductions such as being able to deduct depreciation and loan interest can help pay for any repairs and refurbishments that need to be completed.

You can also have more control over other expenses such as council rates, management fees and maintenance costs.

Investing under a company

One of the main benefits to investing in property under a company is they have a significantly lower tax rate than individuals who pay income tax.

A limited company will pay corporation tax rather than income tax, which is paid at 19% of the company’s profits, compared to income tax which can be up to 45% for high earners.

Another reason is that all the profits that you make can be kept within the company, after corporation tax of course. This means that you have the money to reinvest in other projects.

If you are investing in property as an individual then you will need to pay tax on any profits that you make, even if the intention is to reinvest them.

Lastly, by growing the business and expanding your portfolio you will have a better chance of applying for loans as creditors are more likely to offer good rates if they can see a business is a well-managed limited company.

Speak to the experts

At The Stan Lee, our team of highly trained accountants, bookkeepers and business consultants can help you with all aspects of your business finances. If you would like to know more about how we can help you why not get in touch with the friendly team here?