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Tax I hear less experienced/educated commentators say “change to a limited company” for your rental properties to try and limit the effect of the incoming tax changes. Sounds great and simple doesn’t?! When things are THAT simple they often aren’t as great or easy as one would hope! What about the stamp duty payable for selling the properties to the Limited company, there is a change of ownership/transaction happening to stamp duty will be payable. What about the fact that many landlords bought a while ago with a 15 or even 10% deposit on an interest only basis i.e. the amounts borrowed will still be the same and the property prices may be lower – guess what Limited company lending/commercial mortgages are maximum 60 or 70% loan to value and are only available on a repayment basis!! So if people do decide to change to this kind of borrowing they are going to have to make up the difference to enable the amount borrowed to be maximum 60/70% loan to value. Are landlords trying to save money really going to be able to stump up 15or 25% in cash to reduce their buy to let loans so they fit on a commercial basis? I think not. If you move a house into a company, it will be deemed a disposal for capital gains purposes and you will have to pay CGT (at 18% or 28%) on any gains made since you bought the property. Most of these things have been noted by buy-to-let commentators. But there is one more thing to worry about if you set up a company – one that hasn’t been so often mentioned. It is ‘ATED’, the Annual Tax on Enveloped Dwellings. This is charged on properties above a certain value held inside companies. And it isn’t cheap. If you have a £20m house, it is £218,200 a year (with the payment index-linked). If you have one worth £2m-£5m it is £23,350, and if it is £1m-£2m it is £7,000. That’s real money. You might be thinking by now that you have no need to worry – after all, how many people have buy-to-lets worth £1m plus? But you do need to worry. From 2016, ATED is to be charged at £3,500 on houses worth more than £500,000. And there is no reason for it to stop there. By 2020, when George Osborne’s removal of interest tax relief is complete, it could easily be £150,000. Still want to move your buy-to-let into a company? The only thing that seems feasible at the moment is to try and move your debt onto any commercial properties you may own. All very stressful, I’s sure you will agree, and we haven’t even mentioned interest rates! Personally I am waiting to see if the proposed changes stick, as they genuinely do seem unfair, remember I am not a tax advisor or an accountant so before you consider any changes with anything with tax please seek professional advice. Get in touch for a chat or a cry against my shoulder! Phil