This is a huge topic and so I am only going to suggest that you review your current property portfolio to see what would be best for you in the future.
This is prompted by the rising rates of interests on business loans and mortgages.
Incorporation is one option.
Since 6 April 2017, you cannot deduct finance costs from your profit if they relate to a ‘dwelling related loan’ on let residential properties. In place of this deduction, you now get a reduction in your tax calculated at 20% of the finance costs. But if without the finance tax deduction, you pay higher rate tax, a 20% reducer from your tax does not help much.
It does not impact commercial property landlords, companies with residential letting businesses or to loans to purchase furnished holiday accommodation.
There is a further potential restriction since the 20% can only be applied to a maximum of the rental profits for the year, so that if you have losses being utilised to reduce those profits, then the relief could be lost completely.
To make this even more complicated, each property rental business is considered separately.
Any interest which is not utilised in calculating the reducer is carried forward and can be used in subsequent years, but many businesses are carrying forward large amounts due to historical losses.
Companies can still deduct their finance costs in full.
But there are a number of things to take into accounts such as the cost of transferring ownership and whether existing lenders are prepared to transfer the mortgage to a company. In addition you will need to consider whether the transfer will trigger additional taxes such as LBTT, ADS and Capital Gains Tax.
Lots to think about but we are here if you need help to work out if this course is right for you.