It is beneficial for higher rate taxpayers to own properties through a limited company to avoid paying higher rate tax on property income and finance and mortgage costs related to the property.
However, owning a property through a limited company may not be tax efficient when you sell the property because you end up paying corporation tax on the gain and may have to pay dividend tax or capital gains tax to get the money out of the business.
Nevertheless, the main advantage of owning a property through a limited company is the ability to loan money from your business to the Special Purpose Vehicle (SPV) created to hold the property by an intercompany loan, which is tax-free. This way, you can save money upfront and put that into the new company to buy the property as a deposit and get a mortgage on that SPV.
There are some downsides to consider, such as the fact that SPV mortgages tend to cost more than having a mortgage in your own personal name. Additionally, getting a commercial property through your pension scheme can also be favourable, especially now that you can put more money into pensions.
