Property SPV Companies – Advantages, Disadvantages & Allowable Expenses

1. Full deductibility of mortgage interest

One of the biggest advantages of an SPV is that:

• Mortgage interest is fully deductible as a business expense

• There is no Section 24 restriction (which affects individual landlords)

This can significantly improve post-tax cash flow for:

• Higher-rate and additional-rate taxpayers

• Highly geared portfolios

 

2. Lower headline tax rate on retained profits

SPV companies pay Corporation Tax, not income tax.

• Corporation Tax is currently lower than higher-rate personal tax

• Profits can be retained and reinvested without triggering personal tax

This is particularly attractive for:

• Portfolio builders

• Long-term investors

• Landlords not reliant on rental income for living costs

 

3. Easier long-term portfolio growth

Using an SPV allows:

• Profits to accumulate inside the company

• Reinvestment into further properties

• More predictable cash-flow planning

Many professional landlords prefer SPVs as they treat property as a business, not a personal income stream.

 

4. Flexible profit extraction planning

Funds can be extracted via:

• Dividends

• Salaries

• Director’s loan repayments

Karia Accountants structures profit extraction tax-efficiently, tailored to the director’s wider income and family circumstances.

 

5. Inheritance and succession planning

An SPV can be helpful for:

• Gradual transfer of shares to family members

• Use of alphabet shares

• Holding companies and family trusts (where appropriate)

This can provide more flexibility than owning property personally.

 

6. Professional credibility with lenders and partners

SPVs:

• Are often preferred by specialist buy-to-let lenders

• Are easier to joint-venture with

Keep property risks separate from personal assets