Buying Property Through a Limited Company? Here’s What You Need to Know

Whether you’re investing in a rental property or buying premises for your own business, there’s more to it than signing the contract and collecting the keys. From how you record the costs to what tax you’ll pay, the choices you make early on can have long-term consequences.

This guide covers everything in plain English — no jargon, no fluff — just what you really need to know about property accounting as a UK business owner in 2025.

What Costs Go Where: Capital vs. Expense

When you buy a property, some costs are long-term investments (called “capitalised costs”), while others are day-to-day running costs (called “expenses”).

Capitalised Costs (add to the value of the property)

These go on your company’s balance sheet — think of it like adding to your company’s long-term assets. You don’t claim them all at once; instead, you spread the value over time.

Typical examples include:

• The property’s purchase price
• Stamp Duty Land Tax (SDLT) — the tax you pay when buying property
• Legal fees for buying the property
• Valuation fees required for the purchase
• Major renovations that boost the property’s value
• Estate agent or broker fees

Expenses (show up in your accounts straight away)

These go straight into your profit and loss account and affect your tax bill immediately.

Examples include:

• Legal fees for general advice (not the purchase itself)
• Ongoing property maintenance and repairs
• Mortgage interest
• Annual property valuations not related to buying the property

How You Use the Property Affects the Accounting

There’s a big difference in how you account for property depending on what you’re using it for.

Investment Property

If your company buys the property to rent out or sell later for profit, it’s classed as an investment.

• You record the full cost (including capitalised items) when you buy it.
• Every year, you need to revalue the property (usually using a professional valuer) to see if it’s gone up or down in value.
  • If it’s gone up, you record that as a gain — it shows up in your books as an increase in your company’s worth.
  • If it’s gone down, you show that loss too — but only after reducing any past gains.
• When you eventually sell the property, the profit or loss goes in your company accounts as normal.

Owner-Occupied Property

If your company uses the property for its own operations — like an office or warehouse — it’s classed as owner-occupied.

• You still record the cost when you buy it.
• Instead of annual revaluations, you normally use depreciation — spreading the cost over, say, 50 years.
• Revaluing is optional — if you do revalue, any increases go into a special account called the “revaluation reserve”.
• When you sell the property, any profit or loss is adjusted by that reserve first.

How to Record the Mortgage in Your Books

If you’re taking out a mortgage through your company, the accounting splits into two parts:

When you buy the property:

• Show the full property cost as an asset
• Show the loan as a liability (something the company owes)
• Record any amounts paid by the company (via bank or creditors)

When you pay the mortgage each month:

• The part of the payment that reduces the loan goes on the balance sheet
• The interest (the bank’s charge) goes straight into your profit and loss account
• The full payment comes out of your bank account

Should You Buy Through a Company or Personally?

This is a common question — and there’s no one-size-fits-all answer. But here’s what you should consider:

Tax Differences	Limited company: Your company can deduct 100% of mortgage interest from its profit, reducing its Corporation Tax bill. Individual (personal ownership): Since the 2020 tax changes, you only get basic-rate tax relief on mortgage interest — which means less tax saving overall.
SDLT and Capital Gains Tax	Moving a property from personal ownership into a company triggers Stamp Duty Land Tax again and may result in Capital Gains Tax too — this can get expensive fast.
Mortgage Rates	Mortgages for companies often have higher interest rates than personal ones — so you may pay more over time.
Planning to Buy More Properties?	Company ownership can be more tax-efficient if you’re planning to keep reinvesting profits into future property deals, rather than pulling money out for personal use.

Tax Rates for 2025/26

Corporation Tax (what your company pays on profit)

• Profits up to £50,000: 19%
• Profits over £250,000: 25%
• In between? You get a tapered rate with Marginal Relief applied

Stamp Duty Land Tax (SDLT) – Residential Property

• If the company is buying residential property over £500,000, you’ll usually pay a flat 17% SDLT
• There’s an extra 2% surcharge if the company is not based in the UK
• For commercial or mixed-use property, SDLT is lower:
  • 0% on the first £150,000
  • 2% between £150,001 and £250,000
  • 5% above £250,000

What Happens When You Sell the Property?

When the company sells the property:

• Any profit goes into your profit and loss account
• If the value had previously been increased (through a revaluation), you adjust the revaluation reserve first
• If you used depreciation, you’ll also need to adjust for that
• Don’t forget: there may be Corporation Tax to pay on the profit from the sale

Summary

• ✅ Buying through a limited company can offer full tax relief on mortgage interest
• ❌ But you’ll face higher SDLT rates, and mortgages might be more expensive
• 📊 Property costs should be split between capitalised items and expenses
• 💼 How you use the property — rent it or occupy it — affects how it’s treated in your accounts
• 📅 Investment properties must be revalued each year if using the fair value method
• 💷 When selling, adjust for previous revaluations before declaring a profit or loss