Do You Need a Limited Company to Invest in Property? | Samuel Leeds

Do You Need a Limited Company to Invest in Property? | Samuel Leeds


Hi, Samuel Leeds here, and I wanted to talk
to day a little bit about some of the tax changes coming in and should you be buying
your property, your next property through a limited company or should you just be buying
it as an individual. So that’s what we’re going to be talking about just in the next
couple of minutes. Firstly, let me just give you a quick introduction
to some of the potential new tax changes that they’re bringing in, and why I think that
they are bringing in. So, the government realised that, oh my gosh, property investors are making
an absolute killing. Hmm. We want to slice of the pie. So they’re changing some of the
rules slightly. And it’s basically going to eat out of investors’ profits. Now some of
the landlords that exist today are going to be financially crippled. Some are going to
be absolutely fine. As we are professional investors, we’re going to be absolutely fine.
So the first thing I’ll say is don’t worry about some of the hearsay around the changes
that they’re bringing in. One of the legal changes is the stamp duty
changes. You have to pay a lot more stamp duty now on properties, which is annoying.
They always round it if you’re buying like six properties at a time through a limited
company and things like that, but I think the best thing to do on stamp duty changes
to just accept, you know what? You’ve got to pay stamp duty. And because you’re hopefully
buying a property that’s going to be giving you a high, nice income each month, you’ll
have paid off that stamp duty in a couple of months anyway with the profit that you’re
making through your property. So don’t worry about it. Again, as I always say, when everyone
else is scared and hesitant, that’s the time to be greedy. When everyone’s greedy, that’s
the time to be scared. For stamp duty changes, the tax changes, everyone’s like, “Oh, my
goodness, oh my goodness.” Get in there now. It’s the time. So, stamp duty, yeah. It’s
a pain. Get over it. Tax changes, let me just give you a little
introduction to what the changes are. What they’re saying is, that at the moment, if
you rent out a property and say the rent is £600, and your mortgage payment is £400,
you’re left with a profit of £200 each month. And that £200 is what you would pay tax,
okay. Now of course you don’t pay tax on the first £11,000 that you earn or whatever it
is, but if you … that’s effectively how it works. You pay tax on the profit. What they’re potentially bringing in, and
then saying that their plan is to phase it in, and so it comes in properly in 2020, but
what they’re saying is, that you no longer can claim your mortgage expense as a tax deductible
expense. Hmm. Which means, that if you’re renting a property out for £600, and your
mortgage is £400, you’re still going to have to pay tax on the whole £600. Now, firstly
I’ll say, I think that is a ridiculous law. It’s the only time in the economics of history,
in England certainly, whereby you could potentially pay more tax than you earn. Because if your
mortgage is £600 a month and your rent is 600, you’re making nothing. But you’re still
paying tax. So, it’s a ridiculous law. I don’t even know if it’s going to come in or not.
Because I’m kind of thinking it’s so stupid the guy that brought the law in is now no
longer in his position anymore. There’s uproar amongst hundreds and hundreds and thousands
of investors and landlords, and it’s going to ultimately affect the tenant more so than
the landlord. So I don’t know if it’s going to come in or not. But if it does come in,
what’s going to happen? Well the first thing that’s going to happen
is rents will go up. Because there’s going to be so many landlords that are like, “Oh,
I can’t afford to … I was relying on the income and now I have to pay tax, more tax.”
So they’re going to push rents up. Now rents haven’t gone up, really, from the year of
like 2006 to 2013. Rents did not move. Over the last couple of years they’ve gone up a
bit, certainly on some of the big properties. You could rent a mansion before in the Midlands
for about £1500. Today you’re talking at least 2,200. The rents have gone up, but not
so much amongst the smaller properties or the rooms. So my prediction is, I think that
whether the tax changes come in or not, the tax changes will help it. I think it’s going
to push rents up. So I’m quite excited about that. So that’s one thing I’ll say. Also, it might not come in, but if it does
come in, it’s not going to affect people like me and you that much. Why not? Well, because
if our mortgage is £500, and our rent is £600, we’re going to be really affected,
because we’re going to have to suddenly pay tax on the whole lot and the big, fat mortgage
expense that we’ve been claiming we can no longer claim as tax deductible, an expense.
However, if you’re buying a property that’s cheap for like 100 grand or 120 grand, and
your mortgage is just a couple of hundred pounds, and your rent is like £1500, if you
can’t claim that little £200 as an expense, how much is it going to affect you? £30 a
month? So the new tax change are probably really only going to affect you by about £30
per month per property. And they’ve scared everybody else off, and they’ve pushed rents
up, so really, is it all that bad? I am not sure that it is. If it comes in,
even. So, I don’t think it’s really anything to worry about. Now, there is a way around
it, like there always is, because you know what? The people that make the rules make
money in property. So, there’s always ways round the thing like this. So I think that
one of the ways around this is to buy properties through a limited company. If you buy a property
through a limited company, the rules don’t apply to you. You can still always claim the
mortgage payments as a tax deductible expense. So, a lot of people are not setting up companies
but buying through their company. Now, question. Is it a bit of a nightmare
to do that? It used to be. But now, today, because as one rule changes and becomes more
difficult, another opens over here. There’s an old saying that says as door closes another
opens. So, they’re making this potential change for tax changes, they’ve suddenly made it
a [inaudible 00:06:16] to buy properties through a limited company. You can set up a limited
company tonight for about £12 and it might make you 15, 20 minutes to do it. And then
you can buy a property tomorrow through that company. How? Well, because what they do is they used
to look at the limited company, and they used to say, “Well, let’s do checks on the company
and how much does the company make?” And it was all about the company. Today, it’s not.
The company can be a virgin company, brand new set up. What they do is they look at the
end deed of the company. So as long as you can get a mortgage, you will act as a guarantor
for the company. Makes sense. So what you want to do is you want to make sure that the
company, in fact if the company is an old company that’s been trading, it’s actually
more difficult. If you’re planning on buying a property through a company, you want to
just set up a brand new company with the sole purpose of that company to buy houses. It’s
really easy to do. It costs about £12 to actually do it. You might want to pay an accountant
a little bit extra to directly do it for you. So should you be buying properties through
a limited company? I would say probably yes if you’re planning on building a big portfolio
it would make sense. If you’re just starting out and it’s your first property and you just,
you know, you just want to sort of try it and see how it goes, it might be better to
just buy it as an individual. Reason being is, if you’re setting up a company, you’re
going to have to set it up, you might have to pay someone to do it or do it yourself.
You’re then going to have to do, pay an accountant or do it yourself, but you’re going to have
to treat it as a business and you’re going to have to pay someone to do your accounts
and things like that, so it’s going to be expensive, but for the sake of losing a few
pounds a month potentially from doing it as an individual, I think if you’re just starting
out, I’d probably say, you know what, just buy it as an individual. If you really want to be growing this, you
want to be buying lots of properties, then yeah. Set up a limited company. If you want
help doing that, speak to an accountant. If you email me and you’re interested, I can
give you the details of my accountant. But if you’re just starting out, I’d probably
say do it as an individual. It’s your call. Hope that’s been helpful. And look forward
to speaking to you real soon. Thanks.

41 thoughts on “Do You Need a Limited Company to Invest in Property? | Samuel Leeds

  1. What's the best email address to contact you on?

  2. Mega helpful mate! Looking forward to attending one of your property crash courses. How do I book onto one? Thanks

  3. Can u make some videos on how you started real estate and ways to start young with not much money

  4. hi samual great information, i'm just setting up into buying HMO and have £80000 to start but i need a property accountant as i also have other property's and a storage company, so a little bit more complicated. so do you by any chance no of a reputable Accountant.many thanks

  5. Hi Sam, Been following you for sometime now. You really are my inspiration. I have very poor credit and are in some defaults but I have managed to raise around £15,000. I want to change my life, is there any hope! Please guide me!!

  6. Thanks for this info and your take on the rule changes.
    What do you view as the minimum number of properties or investment that you would then class as a big portfolio…. enough to make it worthwhile setingt up a Limited Company for your properties?

  7. Thanks Samuel, you made it really simple to understand.

  8. Thank you! That’s really good info. I’m looking at how I can by my first property. Can’t get a mortgage because I’m self employed.

  9. What happens if you buy your first property not part of a company initially then want to transfer it over to the company. Is this possible to do.

  10. What about the CGT exemption not being applicable to limited companies? Surely this is a major consideration that wasn't discussed

  11. I thought the changes are that you will not be able to claim Mortgage "Interest" as expenses after 2020, i.e. that's what is being phased out? Not the the Total "Mortgage" payments?

  12. Hi Samual, Quick two questions. 1( What happens if you buy your first property not part of a company initially then want to transfer it over to the company. Is this possible to do). 2(Once you have bought your property through a limited company and want to rent it, I assume it is rented through the company and then you will have to pay your self an income. Wouldnt that mean you are still taxed 20% if you are under 45k?

  13. This video was very helpful thank you

  14. Thanks Samuel! I was also wondering is the stamp duty the same for a limited company to a individual?

  15. Hi Samuel what is your email address

  16. Can you give an example of when youve purchased a property for £100,000 and rented it for £1500? Thats an 18% yield per year is that even possible?

  17. You forgot to include the 20%Tax credit that you get back. So you are taxed on the whole amount but the get a 20% Tax credit on the mortgage interest. This will push some in to higher Tax brackets then only give a 20% relief on the mortgage interest not 40% as we currently have for have rate payers. This is being phased in. Its not as bad as it sounds especially for cash buyers. I think you got it a bit wrong.

  18. I've recently started out on property investment in the UK. I never understood what the new tax rules meant until I listened to this video. Thank you Samuel

  19. what happens when you want to sell the house, are you selling the company or the house and if so how easy is it to remove the house from the portfoleo of the company

  20. Good advice – you answered all my concerns. I’m buying my first BTL and was wondering if I should set up the limited company. But won’t now.

  21. nice one Samuel, can you make new videos on the subject of buying through ltd company?

  22. 20percent

  23. Thanks

  24. Sounds really good to hear but a bit unrealistic… please tell me which area in the UK can you buy a one bed flat for 100k-120K and rent that for £1500. That will most possily push anyone into a high tax bracket meaning paying 40% tax on that income or a part of it…

  25. How does tax work when you own property outright with no mortgage? Does one pay tax on the full rental income? Cheers

  26. Does this apply to lease option agreements?

  27. The government are idiots. Now there are less properties available whilst more people want to rent. I think the end game is for the Rothschilds, with the help of the government, to confiscate all or most of the wealth of the citizenry via tax and debt peonage!!

  28. As stupid as the law is they still seem to be going along with it!!

  29. If you're a higher rate tax payer there's more incentive to do it through a company.

  30. So very helpful! Thank you! Will book onto your course after my exams in August!

  31. What if your just starting out and investing into a joint btl property with partner who doesnt currently need to do tax returns

  32. Samuel I have a few ideas pls email me [email protected]

  33. CGT !!

  34. Hi Samuel would have to pay the higher rate tax if you buy a property as an individual as a second stream of income alongside a job?

  35. Hi Sam great video. Thanks for making it. I am just starting with a bit of capital so was wondering what is your email address as I like to get some advice from your accountant. Cheers

  36. Give me a job and il show you how to make 10k a week payin very little tax 🙃🙃#samuelleeds from one property noscam 100%leagle

  37. It is possibly the case that the Conservatives will not again be voted for by many landlords for quite some time. They have attacked not only their own supporters but also gone against centuries of precedent and tradition; that one pays tax on profit not on turnover.

  38. i sam can you give me more details in setting up a ltd property investment company

  39. What about using a trust rather than a limited company to invest?

  40. like your videos mate so easy to follow and no bull shit jargon.

  41. Typical greedy pigs the UK
    I am currently reading Rich dad/poor dad and Robert says you can pay tax last after your accountant and other stuff, where if your an employee tax is taken first
    Wonder if This applies to UK

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