As the property market adapts to new tax rules and rising borrowing costs, an increasing number of landlords and homeowners are asking whether they should sell their house into a limited company.
The idea has gained traction since the government phased out mortgage interest relief for individual landlords. By holding property in a corporate structure, landlords can often deduct mortgage interest as a business expense, potentially saving thousands of pounds. But experts caution that this strategy is not without pitfalls. In 2025, selling property into a company remains a complex decision — and one that requires careful consideration.
What Does It Mean to Sell a House into a Limited Company?
Selling a house into a limited company means transferring legal ownership of the property from yourself as an individual to a company that you control. That company then becomes the landlord, receives the rental income, and pays tax on profits.
This structure can offer advantages for property investors, particularly those with multiple buy-to-let properties. But it is very different from simply owning property in your personal name. The company must file accounts, pay corporation tax, and often use specialist lenders for mortgages.
Why Are Landlords Considering This Move?
The primary driver is tax. Since the introduction of Section 24 of the Finance Act, landlords holding property personally can no longer deduct all of their mortgage interest when calculating taxable profit. Instead, they receive only a basic-rate tax credit.
For higher-rate taxpayers, this significantly reduces the profitability of buy-to-let. In contrast, limited companies can deduct mortgage interest as a business expense, allowing them to pay corporation tax (currently 25% for many businesses) on net profit rather than gross rent.
Additionally, limited companies can sometimes benefit from lower stamp duty on multiple property purchases and greater flexibility in transferring shares to family members.
The Hidden Costs and Risks
Despite the potential tax benefits, selling your house into a company is not straightforward. There are several major costs to consider:
- Capital Gains Tax (CGT): Transferring a property into a company is treated as a sale. If the property has increased in value since you bought it, you may face CGT.
- Stamp Duty Land Tax (SDLT): The company will have to pay stamp duty on the “purchase,” often including the 3% surcharge for additional properties.
- Mortgage Costs: Most standard lenders will not finance limited company mortgages. Specialist lenders are available, but interest rates and fees tend to be higher.
- Accountancy and Administration: Running a company means filing accounts annually, complying with regulations, and potentially paying for ongoing tax advice.
“People often underestimate the upfront costs,” warned a tax adviser based in Southampton. “For small landlords with just one or two properties, incorporation may not be worthwhile.”
Who Might Benefit Most?
This strategy is generally most attractive to:
- Portfolio landlords with several properties, where tax savings can outweigh upfront costs.
- Higher-rate taxpayers, who lose more from Section 24 restrictions.
- Long-term investors, who plan to grow and manage their portfolio professionally.
For single-property landlords or accidental landlords (such as those renting out a former home), the financial benefit is usually marginal or negative.
By moving properties into a company, landlords can offset mortgage interest more effectively, making the numbers stack up. Some also use the structure to involve family members by issuing shares, helping with succession planning.
However, local brokers note that demand for specialist mortgages can outstrip supply, meaning not every investor finds a suitable product.
Case Study: A Portfolio Landlord’s Experience
Consider the example of James, a landlord with six rental properties in the South of England. As a higher-rate taxpayer, his annual tax bill rose sharply after mortgage interest relief was cut. By incorporating and moving his portfolio into a limited company, James was able to offset mortgage interest and reduce his tax liability by nearly £15,000 per year.
But the transition wasn’t cheap. He paid more than £40,000 in combined capital gains tax and stamp duty during the transfer. In his case, the long-term savings outweighed the upfront cost – but this may not be true for smaller landlords.
Legal and Practical Considerations
Before making the move, landlords should also consider:
- Inheritance planning: Limited companies can provide more options for passing property to children via shares.
- Financing challenges: Company mortgages often require larger deposits and stricter affordability checks.
- Exit strategy: Selling property owned by a company can trigger corporation tax and, when profits are extracted, further personal tax liabilities.
“Running property through a company makes sense for some, but you’re turning a personal investment into a business,” explained one Isle of Wight accountant. “That comes with responsibilities as well as benefits.”
Alternatives to Incorporation
For landlords unsure about incorporation, there are other strategies to improve tax efficiency, such as:
- Switching to lower-rate tax bands by transferring property to a spouse in a lower bracket.
- Exploring furnished holiday let status, which has more generous tax treatment in some cases.
- Restructuring finance to maximise allowable deductions.
These alternatives may offer partial relief without the complexity of running a company.
Expert Advice: Essential Before Acting
Almost every industry professional agrees: this is not a decision to make alone. The financial implications are complex, and mistakes can be costly. Tax advisers, accountants, and mortgage brokers should all be consulted before transferring property.
“Once you sell into a company, it’s very difficult and expensive to reverse,” said a tax lawyer. “That’s why careful modelling is critical. For some, it’s a golden opportunity. For others, it’s a trap.”
The Outlook for 2025 and Beyond
As the government continues to reshape housing policy, landlords are under pressure to professionalise. The move toward limited company structures reflects this shift. Analysts expect the proportion of buy-to-let mortgages issued to companies to grow further in 2025, consolidating the trend.
Yet tax policy could change again. Any new government could adjust corporation tax rates, inheritance rules, or stamp duty. Investors must therefore be cautious about relying solely on today’s rules to justify long-term decisions.
Final Word
Selling your house into a limited company is not a quick fix – it is a strategic move suited to certain landlords, particularly those with larger portfolios and higher tax liabilities. The potential rewards are significant, but so are the risks and upfront costs.
For property owners on the Isle of Wight and across the UK, the decision comes down to careful financial planning and expert advice. Without both, what looks like a tax-saving opportunity could turn into an expensive misstep.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen.
Most Buy to Let mortgages are not regulated by the Financial Conduct Authority.
Bransgroves Mortgage Brokers is a trading name of Just Mortgages Direct Limited which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited which is authorised and regulated by the Financial Conduct Authority.
Approved by The Openwork Partnership on 28/11/2025
