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Tax efficient way of setting up with a partner


bobm84

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Hi all, I did try to search for an answer to this but could not find anything so sorry if i've missed it.

 

Myself and my business partner (both 20% rate tax payers)  are looking to buy our first BTL property soon. Our goals are to recycle our deposit as best as we can and continue purchasing property. The properties will hopefully be used as a pension, and eventually passed on to both sets of family members. We will not need to use the monthly cash flow initially (other than to reinvest), but in 5 years hope to start using some of it to allow us to drop down a day in our jobs.

 

What i would like to know is what is the best, most tax efficient way to set up? Partnership or LTD Company?

 

And is there anything we can do now that will make passing on the properties to both our separate families easier in the future?

 

 

Thank you in advance for any help you can give me.

 

Bob

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I agree with seeking professional advice.

 

That said, it depends if you're looking to finance using a mortgage, or plan to in the future. It won't affect you as much while you are in basic tax bracket, but in the future rental income can push you both into the higher tax bracket, and as far as I know only in a Ltd co can you claim mortgage interest payments as tax relief. 

 

It will be more admin work but can save you in the long run as you'll have a formal agreement that both of you own 50% of the assets/liabilities etc. 

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