Why landlords need to wait three years to set up a Family investment company

Professional Landlords and Limited Companies
Some landlords suggest managing property portfolios through limited companies to address income tax concerns related to section 24 issues.
However, even after incorporation, company shares remain part of the estate for inheritance tax purposes.
Inheritance Tax Challenges for Professional Landlords
Long-term challenges for professional landlords often involve inheritance tax issues that need careful consideration.
Advantages of Family Investment Companies
Charles advocates for the use of family investment companies and employee benefit trusts, especially for those with significant capital gains and inheritance tax problems.
Incorporation Relief and Partnership Accounts
Immediate Claim for Incorporation Relief
Some accountants propose an immediate claim for relief when properties are owned equally by married couples.
However, HMRC typically requires separate partnership accounts and personal tax returns for at least three years.
Patient Approach for Successful Claims
Charles recommends patience to ensure a successful claim for incorporation relief on the first attempt.
Avoiding potential issues on a second claim after the three-year period is crucial.
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[@stephenclark6811]

Thanks. Are there any downsides during that initial 3 year period, such as not being to claim 20% tax credit on any finance interest?

[@Inheritancetaxadvice]

No The properties remain in your name and you can still reclaim the 20% tax credit - the only downside is that there is an additional accountancy cost to doing a tax return for the partnership but that is a small cost to pay for the protection if you set up an LLP as suggested

[@stephenclark6811]

Thanks👍