Section 24 Tax: The Rise of the Limited Company Portfolio
Section 24 wiped out the profits of amateur landlords holding properties in their personal names. For the educated investor, this triggered the transition to tax-efficient Special Purpose Vehicles (SPVs).
When the government introduced Section 24, restricting mortgage interest tax relief for individual landlords, a wave of panic swept the industry. Many 'dinner-party landlords' sold up as their tax bills exceeded their rental profits.
For the professional, Section 24 was the catalyst for proper corporate structuring. By purchasing properties through a Limited Company (an SPV), mortgage interest remains fully deductible as a business expense. Furthermore, holding assets in a company allows for flexible profit extraction via dividends, family shareholding structures, and eventual inheritance tax planning. The difficulty forced the industry to mature.
The Mindset Shift
Tax laws change constantly. Instead of complaining, hire a specialist property accountant. Use corporate structures to shield your wealth while amateurs flee the market due to tax ignorance.