Can a limited company buy a commercial property?

Can a limited company buy a commercial property?

You can buy a commercial property through a limited company. It is a strategic move that gives various advantages depending on your unique business needs. Whether you intend to use the property for trading, residential or commercial buy-to-let purposes, or purely as an investment opportunity, the decision hinges on your specific objectives and the potential benefits it offers.

What are the benefits of buying a commercial property through a limited company?

By opting for this way of buying, the legal ownership shifts from an individual to the company. There are a number of benefits of buying through a limited company, but it is important to remember that everyone’s situation is different.

Tax efficiency: Limited companies incur corporation tax, a significant reduction compared to the 40% rate for higher-rate taxpayers. This results in substantial savings, particularly as mortgage interest is considered a company expense, allowing deductions from profits before tax obligations.

Expense allowances: Unlike private landlords, limited companies benefit from the ability to deduct costs such as mortgage repayments from profits. This means they only pay tax on profits earned after expenses which is not an option for individuals.

What are the disadvantages of buying a commercial property through a limited company?

Buying a commercial property through a limited company is more complex than buying as an individual. Before doing so, it is important to consider the potential drawbacks of this. 

Limited mortgage options: Many mainstream banks are hesitant to lend to limited companies, and the unregulated nature of commercial mortgage lending in the UK may constrain available options.

Capital Gains tax: If the property's value appreciates between purchase and sale, the limited company becomes liable for capital gains tax.

Compliance and administration: Operating a limited company demands strict adherence to legal and regulatory frameworks, including meticulous accounting records, annual accounts, and tax returns.

Stamp Duty: Limited companies are subject to slightly higher Stamp Duty when acquiring property compared to individual buyers.

Given the uniqueness of each situation, it is imperative to carefully evaluate your tax position and the specific reasons behind opting for a limited company structure. Seeking professional advice ensures well-informed decision-making and having the correct setup and registration of the limited company with relevant authorities.

It’s a good idea to get legal advice before you go ahead and buy a commercial property through a limited company. 

How Can GloverPriest Help?

At GloverPriest, we provide friendly and transparent legal advice. If you would like further advice on your property, please don’t hesitate to speak to one of our expert lawyers today. Complete our enquiry form.