Property held in trust by Director

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    Property held in trust by Director

    Given the difficulties in arranging mortgage finance by limited companies, is it technically possible for a director to acquire property on behalf of his limited company? If so, would the income and gains be taxable on the company, or the director?

    #2
    Originally posted by dor8feb View Post
    Given the difficulties in arranging mortgage finance by limited companies, is it technically possible for a director to acquire property on behalf of his limited company?
    Yes, in conveyancing terms at least. The Director could be a legal title-holder, as trustee for the company, but he/she would need to comply with the Companies Acts concerning dealings between a company and its Directors [e.g. special resolution at Extraordinary General Meeting].
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

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      #3
      Often for tax purposes it is better for the Director to hold a property directly. Gains on sale of a property within a company are taxed twice - once in the company at 28%; then again on the individual at 40/50% when profits are distributed.

      It also takes the property out of the company so creditors do not have a claim on it in the event of insolvency.

      OTOH, other liabilities fall on the freeholder that cannot be taken on by the occupier. Fire risk, for instance.


      Jeffrey refers to the Director holding legal title, beneficial ownership being within the company. You would be well advised to investigate different scenarios with a professional adviser.

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