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[Music] welcome to property 118 tv the channel dedicated to busting myths about landlord tax in this episode i'm going to talk about smart property company structuring now we know that about 85 of all buy to let mortgages these days are done in the name of limited companies and the reason for that is the section 24 restrictions on finance cost relief limited companies can offset their finance costs against income just like any other business but private landlords partnerships and llps can't do so so that's why are the primary reason why most landlords are buying in limited companies from this point onwards however what they tend to do is to go to their accountants and ask them to set up a limited company or they'll just go and buy and form a limited company um by going on the internet and i've seen adverts to create limited companies from as little as 12 pounds 99 pence and what you get for that is a company with usually one ordinary share or you may get a company structure that's got a hundred ordinary a shares and that's typically what the accountants will form for people as well but there are fantastic opportunities to mitigate inheritance tax and for income tax planning if you form your structure properly and that doesn't include having ordinary a shares nobody wants to be ordinary in property investment this having your company structure right is a bit like having the putting the foundations right for a building if you build on sand you know you're going to have problems later on if you don't get your foundations entirely right again you're going to have problems further down the line so in this episode i'm going to show you a little spreadsheet that gives an example of an optimal smart property company structure okay so you can now see on my screen we've got a an example of a business a limited company that's been created for john it's a hundred pound company it doesn't have any property in it to start off with and i'll just give you a little bit of background to john it's an example case it's not real but it could very well be so in this example john is the the property investor and he wants to create a company but he's got some other issues he wants to consider so he got divorced a few years ago he's got a girlfriend and they've been together for a couple of years she's a basic rate taxpayer whereas john is a high rate and john wants to utilize um olga his girlfriend's basic rates tax band because he can pay dividends to olga and only pay seven percent tax however he doesn't want us to have any control over the company and he doesn't want to have any growth in the company and you'll see here that we've got things like voting rights dividend rights capital rights when you...