Buying a property partly using own Ltd

Skag wrote: »

I just wonder, if I am a contractor for 5 years and have got a nice stash of money in my company, can I use that money to purchase a property to live in? Or would I have to take all the money out (and re-tax it) and then buy the property?
It's not a cunning plan or anything, I just wonder how does one use his Ltd money to buy a property?

as we've said, company purchase would be tax inefficient, taking the money out would of of course be taxable, but overall may be cheaper.

if the company owns the property then unless the company buys for cash the company will need commercial loans, not mortgages, and they cost more. One client I'm dealing with at the moment is having to pay 8% interest

as an employee of the company you will then have annual benefit in kind tax to pay on your "free" accommodation and the company will pay tax without the sort of releif you'd get if owned personally when it sells the property.

Also, as it appears you have a high income, bear in mind there are "special" rules (ATED) for "high value" properties purchased by companies. If the property cost more than £500,000 to purchase, then the company has an Annual Tax on Enveloped Dwellings (eg that would be £3,500 per year for a property between £0.5 - 1m).

The high rate SDLT rules would also apply


go talk to your accountant, you have barely scratched the surface of your options and their associated tax implications

Do you actually have an accountant? Because I can't see that he/she would recommend that you leave money in the company for 5 years. If you wish to benefit personally from that cash then it needs to come out of the company one way or another, and unless you are planning to have a year dead for tax purpose (cf. Hotblack Desiato, Hitchhiker's Guide to the Galaxy, Douglas Adams) then taking it sooner rather than later so you can do something to make it work for you would seem the sensible option.

What will this company be doing to have revenue of £100K per year while you are doing something else that earns you £30K per year? The company won't run itself, you surely need to be doing something to make that revenue happen. I'm not convinced that your figures hold water.

silvercar wrote: »

Not if you repay the loan within 9 months of your company's year end.;)

indeed, but you did not qualify your statement with that condition did you :cool:
Instead you recommended that OP take "a loan" for a property purchase. One could say that if OP can repay said sum within 9 months then OP does not need a loan in the first place and can purchase for cash. however, it appears OP cannot access such cash currently as it is perfectly legitimately (and normally for those not needing cash and not wishing to pay higher rates of tax if their lifestyle does not require that level of taxable income) sheltered in the company free of tax as would be the accountancy advice to those with no immediate need to access company cash and no wish to pay tax in withdrawing it as a lump sum