In addition, transferring the property officially can be both more costly and time consuming, but transferring the SPV company instead of transferring the property’s itself allows you to carry out the transfer process both faster and less costly. In fact, you will transfer the real estate faster and more cost-effectively.  

If you buy a property for renting out as an individual with a mortgage (Buy to Let), you are liable for the loan debt with all of your personal assets. 

However, if you buy a property through an SPV company, the SPV company is liable for the loan debt with its own assets as it has a separate legal entity. Thus, your personal assets will not be affected by the loan debt.

At the same time, lenders are more generous to SPVs than to individuals. This is because the SPV company facilitates real estate investment and expands its portfolio faster.

On the other hand the Mortgage Interest is no longer a tax relief for the individual investor who purchases a property to rent out. In addition, Mortgage Interest is not an item that can be deducted from income tax due to rental income as mortgage expenses for an individual investor. However, this does not apply to SPV companies. When you make a real estate investment with a SPV company, you have the opportunity to reduce your tax by a significant amount.

It should be noted that the UK has a tax rate based on income and you will pay income tax up to 20%, 40% and 45% depending on your situation. Rental income is also included in income tax. Therefore, as your rental income increases, the income tax you will pay will increase. In the case of an SPV company, you will be liable for company tax on the company’s income from the rent. Remember that you are also entitled to an annual tax-free dividend of £2000 from your company.

Depending on the status of the SPV company, you can withdraw high dividends and low income from your company or you can reinvest the profits by keeping them in the company.

Also we should mention for the Capital Gain Tax (CGT). As an individual investor, when you want to gift the property, you are generally subject to capital gains tax and the amount of tax you are liable to pay varies according to the tax rate and you have to pay capital gains tax between 18% and 28%.

However, if you own the relevant property(ies) through an SPV company, you will ensure a simple and fast transfer by giving a share from this company to the person you want to benefit to inherit and you will reduce your tax liability in terms of inheritance tax.

Property investment through SPV companies, whose advantages we have explained above, is a form of investment that investors intensively prefer in the UK. You can contact us to evaluate your options for property investment in the UK and investment through SPV companies.

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