An LLP is a separate legal entity from its members (partners) and can buy properties in its own name. It costs more to set up than a limited company but their is much less red tape involved in running an LLP [click here for further information]. There has to be at least 2 partners (individuals, companies or other LLPs can be members - as can foreign companies) and you will need to have a solicitor draw up a proper partnership agreement which will set out what each partner is to contribute and what share of the profits will belong to each of them.
Although a most useful structure for most business uses there are drawbacks when used as a vehicle to invest in property, the main one being that most lenders are unwilling to offer more than 75% loan to value.
Taxation. The partnership itself does not pay tax but draws up partnership accounts to show what profit has been made and each partner is then responsible for paying the tax on their share of the partnership profit. As with a sole trader profit on rental will be taxed as part of the overall income of each partner at the highest rate they pay and profit on sale of properties - Capital Gains - will be taxed at 40%. That said there are ways to mitigate the tax burden and you should speak to a specialist property accountant or independent financial advisor. If you contact us we will be able to put you in touch with someone local to you.
To consider the pro's and con's of different types of company structure including trading as a Limited Liability Company in greater detail visit the following website: AR Corporate - Types of Company or download the following document Why Trade as a Limited Company.
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