The smart investor’s guide to property tax structures
When you invest in property, it’s not just about location or price. The structure you choose will shape your tax bill, the risks you take, and how easy it is to pass on wealth. Whether you’re buying your first rental flat or growing a portfolio, the right setup will help you protect your assets, reduce tax, and plan for the future.
Let’s look at the main options and what they mean for you.
Sole ownership
Sole ownership means the property is in your name. You receive all rental income and gains if you sell.
Tax points - You’ll pay income tax on rental profits at your personal rate. This includes the impact of mortgage interest relief limits. When you sell, any profit above your annual capital gains tax allowance is taxed.
Pros - Simple to set up. You have full control over decisions, with no need to consult others.
Cons - If your property income pushes you into a higher tax band, you could end up paying more tax. You’re also fully liable for debts, legal claims, or other risks linked to the property.
When it suits - Small-scale landlords who want simplicity.
Joint ownership (with a partner or spouse)
Joint ownership means you both own the property - either equally or in shares.
Tax points - Rental income and gains are usually split 50/50 unless you declare a different share. This lets you make use of both owners’ tax allowances and lower tax bands.
Pros - Can cut tax if one partner is a basic-rate taxpayer. Makes use of two capital gains tax allowances when selling.
Cons - Decisions must be agreed between you. You share liability for debts.
When it suits - Couples looking to balance tax and share investment.
Partnership
A partnership is where two or more people run a property business together, formally or informally.
Tax points - Each partner pays income tax on their share of profits. No corporation tax applies.
Pros - Allows flexibility in splitting profits and responsibilities. You can pool funds and skills.
Cons - Unless you set up a limited liability partnership (LLP), you’re personally responsible for partnership debts.
When it suits - People investing with friends or family, where flexibility matters.
Limited company
Here, a company owns the property, and you own and control the company.
Tax points - The company pays corporation tax on profits. You pay tax on salary or dividends when you take out money. Mortgage interest is fully deductible at the company level.
Pros - Lower corporation tax rates. Greater control over how and when you take profits. Protects personal assets from business debts.
Cons - Running a company means more admin and cost. You could face double tax - corporation tax on profits and personal tax on what you draw.
When it suits - Investors building larger portfolios or planning to leave profits in the business for growth.
Limited liability partnership (LLP)
An LLP gives flexibility of a partnership but with protection for personal assets.
Tax points - You pay income tax on your share of profits, even if you don’t draw them out.
Pros - Flexible structure. Limits your personal liability.
Cons - No corporation tax - so no chance to pay lower rates. You still face income tax on profits.
When it suits - Property investors who want partnership flexibility but asset protection.
Trusts
Trusts are mainly used for estate planning and passing wealth to others.
Tax points - Trusts have complex rules. They may attract higher income tax or capital gains tax rates. But they can help reduce inheritance tax exposure.
Pros - Protect assets for future generations. Useful for managing who benefits and when.
Cons - Higher setup and running costs. More complex tax and legal compliance.
When it suits - Those planning to pass wealth on while protecting assets.
What to think about
Before you choose a structure, think about:
Your short- and long-term goals - do you want income now, growth for later, or to pass wealth on?
How you want to take profits - as personal income, dividends, or keep them in the business
Your attitude to risk - how much personal liability are you willing to take?
The size and scale of your plans - what works for one property might not suit a portfolio
How you want to plan for inheritance
How we help
We help property investors make smart choices. You’ll get clear advice on tax, structure, and compliance - so you can invest with confidence. From first-time landlords to experienced investors reshaping their portfolios, we’ll help you build a structure that works for you.
Ready to plan ahead?
Ask us today about the right property structure for your plans. Book a free, no-obligation consultation.
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