New BTL - Should I buy as me? Or as a company?

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    New BTL - Should I buy as me? Or as a company?

    Looking at getting another BTL. For various reasons it will be a cash purchase.

    My Wife owns our current BTL's for tax reasons although I'm now a lower rate tax payer.

    Buying a new place as ourselves is straightforward.

    However should we look at setting up a company and buying through it? We could loan the company the money and thus get rid of any profit by repaying us the loan (so no corp tax).

    GCT isn't a worry as no plans to sell but pass onto children.

    So some questions

    How easy is it to set up a company with Wife and I as Directors? Possibly add children in years to come

    How much of an admin chore is it?

    Can we loan the firm money, and then repay that loan in stages avoiding Corp tax?

    What are the costs associated in running a firm?

    All help and comments appreciated


    #2
    There is nothing to be concerned about in starting a Ltd Co to hold Property, make sure you have the relevant SIC code just in case you decide to purchase another property and raise a mortgage to complete the purchase or subsequently wish to raise a remortgage.

    You clearly are aware of the current tax benefits of owning property in such a vehicle , which cannot be guaranteed going forward. The startup costs and admin costs will be discussed with a suitably qualified accountant and ideally one that understand Residential property investment. A company can be setup at a nominal cost yourself or it can be done by the accountant but the costs will as you would expect be much higher, get a couple of quotes.

    Money from your personal resources can indeed be loaned to the company and repayment can be arranged as and when it suits your purposes, your accountant will again advise you.

    So find a good accountant , get advice and an indication of costs and what work is involved. If however you do not intend to buy anymore that this one you might feel that it might just be better to buy in your joint names.

    Comment


      #3
      The above advice is sound.

      Four points to consider that occurred to me reading your post:

      While CGT "isn't an worry", the rate of CGT is lower than the rate of IHT you may incur when passing assets to children. So that's worth discussing with an accountant,

      If your wife is a higher rate tax payer it may be beneficial to look at the ownership structure of "your" current properties. It may be beneficial to make a number of incremental transfers to avoid incurring CGT (although there are legal costs that may offset any benefit).

      Getting income out of a company isn't as simple as it might appear, dividends are taxed with only a small allowance, and paying interest or salary means income for the recipient. And, should circumstances change - if one of the shareholders dies for example, unwinding the company or passing on its assets can be complicated. Make sure you consider how you will exit the company.

      Corporate lending can be more costly than personal lending. Shop around.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        You need to discuss all aspects with an accountant as the over all position of you and your wife needs to be taknen into account as well as your plans for the future.

        Comment


          #5
          You might actually find that a family solicitor is helpful as an alternative to (or as well as) an accountant.
          Whatever you end up doing, it's likely that your wills should reflect your plans.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            Tax advice is certainly an area covered by both lawyers and accountants - there are also other professionally qualified tax advisers such as Chartered Tax Advisers. On the whole, the average high street accountancy firm is likely to know more about tax than the average high street solicitors. Whoever you choose, the important thing is not to let the tax tail wag the everything else dog.

            Comment


              #7
              You asked " Can we loan the firm money, and then repay that loan in stages avoiding Corp tax? "

              Answer : Repaying a loan in stages does NOT avoid Corp tax .

              You don't understand how Corp tax is calculated. Better for you to buy a Which Guide on Taxation before you act. .

              Comment


                #8
                what gordon says is correct, a loan repayment isnt a cost so it therefore doesnt effect your profit ie your rental income. tax is payed on profits so you will be paying tax on all of your rental income.

                Comment

                Latest Activity

                Collapse

                • Should I get out of buy to let?
                  Propertygoesup
                  I'm 36 with an average job (25k) and one buy to let. No other properties. The time has come for me to find my own residence. My property is worth around 220k with a mortgage of 103k. Rent is 9k a year. I am also owed about 70k in loans coming back at 1.5k a month. I currently have no pension plan....
                  23-04-2018, 08:46 AM
                • Reply to Should I get out of buy to let?
                  Propertygoesup
                  Just to confirm I don't own my own residence I have been living in someone elses house.
                  also one reason I thought I should keep the buy to let is as a pension alternative.
                  i have no other assets just the 110k approx equity in the buy to let plus 70k owed to me.
                  23-04-2018, 11:10 AM
                • Reply to Should I get out of buy to let?
                  AndrewDod
                  Depends a lot on what other investments you have. If you have say £5 million in assets it may be worth having 10% invested in property that is not your home. If you have few other investments it makes less sense.

                  The risks are palpable right now. Not so much a matter of "getting out"...
                  23-04-2018, 10:08 AM
                • Reply to Should I get out of buy to let?
                  jpkeates
                  You basically need to sit down and work the figures for each scenario over the next x years - where x is the number of years you realistically think you can plan.

                  That will force you to make assumptions about interest rates, whether you're likely to want to live somewhere else and how much...
                  23-04-2018, 08:59 AM
                • HMO multiple properties
                  Jamiesadler
                  Hi,

                  i am looking to invest my savings into some HMO properties. I have a lot of experience in renting out homes to families but would like to make a change.

                  My question is - How many hmo properties can I own?

                  For example - I’m aware that you have to put down...
                  18-04-2018, 21:02 PM
                • Reply to HMO multiple properties
                  loanarranger
                  May I add a saluatory caution on this matter as articulated well by Hech123 but with a bit more flesh on the ramifications when Landlords ignore their responsibilities.
                  i had a client some time ago who allowed a Managing Agent to create a Ltd Co Let to a taxi firm which in turn housed its drivers,...
                  22-04-2018, 18:03 PM
                • Reply to HMO multiple properties
                  hech123
                  "The regulations state that the property needs to be safe, this does not mean that you have to fit fire doors unless you are instructed to do so." You are completely wrong on this. If you need a fire door then you need a fire door, it would only be deemed safe if you have a fire door fitting...
                  22-04-2018, 16:48 PM
                • Buying 2 bed rooms property in London
                  BSad
                  All,

                  I am relatively new to the property market. I have been renting all my life. I would like to invest in a property in London.

                  I have 60 K which i would like to use as a deposit. I am aiming for a 2 bed room properties between 450 to 500K max

                  I am looking for...
                  19-04-2018, 19:54 PM
                • Reply to Buying 2 bed rooms property in London
                  BSad
                  loanarranger that's a good point. I ll assess first how much I can borrow before narrowing down the areas i can afford. I am 34 years old.....
                  22-04-2018, 08:31 AM
                • Reply to HMO multiple properties
                  amazondean
                  Not having for instance, fire doors does not make a property unsafe.
                  Having fire doors does not make a property safe, only safer.
                  Having a broken fire door could be unsafe
                  A consumer unit that is not to modern building regulations does not make a property unsafe
                  If something...
                  22-04-2018, 07:48 AM
                Working...
                X