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ptrichardson
Posts: 240 Forumite
Hi folks,
I have a bit of an unusual situation, at least it is to me, and was hoping for some guidance.
For better of worse, I owned a house with a friend that we had planned to sell, but due to the crash in 2008, we were unable and it ended up being rented since (except for one year where I lived in it after selling one house and later buying and renovating another).
Its on a residential mortgage, which has never been ideal.
Right now, I'm at the last stage of "buying" this house off my friend and having myself and my wife as owners.
Once that bit is done, I want to remortgage it again, but as a BTL.
That's not too hard, only I'm going to be stung with the 2nd house stamp duty on the transfer of equity / initial remortgage, which is going to be about £2000
That's not too tricky so far. But....
I want to move house - and I really don't want to sell the house I'm in - I want to rent that out too. Then I'll have 2 houses. The start of plan to change careers in the long term, or at least a great top up on my pension.
So its another BTL mortgage on my current home.
Then I'll be buying another home to actually live in. As I understand, it'll be THIS 3rd house that I'll have to pay 2nd home stamp duty on , so it will cost me about £7000 (including normal stamp duty), which is harsh but thems-the-rules I guess.
So I'm about £7000 down on 2nd home stamp duty.
I'm a higher rate tax payer, so I'm going to be paying 40% on the profits from the rent.
And I don't actually need the rent in my hand - Its more of a long term investment. Ideally to be saved until I have a 25% deposit for another house to rent etc etc until I have 5-6 houses. I wouldn't expect to take anything out of the company except expenses until I retire/ quit working in IT.
Seems to me like I'd be better off forming a limited company, transferring both rental houses into it.
Then I'd be able to claim back the £7000 in 2nd home stamp duty charges - although about £1500 would probably be lost to conveyancing costs
Any thoughts? Am I mistaken in anything I've suggested?
I was self-employed until recently, so I'm familiar with running a limited company
Is it any more difficult to get a mortgage for a limited company than it is as a personal BTL mortgage? More expensive?
Will most all-of-market mortgage brokers have access to both sides?
Thanks for reading.
I have a bit of an unusual situation, at least it is to me, and was hoping for some guidance.
For better of worse, I owned a house with a friend that we had planned to sell, but due to the crash in 2008, we were unable and it ended up being rented since (except for one year where I lived in it after selling one house and later buying and renovating another).
Its on a residential mortgage, which has never been ideal.
Right now, I'm at the last stage of "buying" this house off my friend and having myself and my wife as owners.
Once that bit is done, I want to remortgage it again, but as a BTL.
That's not too hard, only I'm going to be stung with the 2nd house stamp duty on the transfer of equity / initial remortgage, which is going to be about £2000
That's not too tricky so far. But....
I want to move house - and I really don't want to sell the house I'm in - I want to rent that out too. Then I'll have 2 houses. The start of plan to change careers in the long term, or at least a great top up on my pension.
So its another BTL mortgage on my current home.
Then I'll be buying another home to actually live in. As I understand, it'll be THIS 3rd house that I'll have to pay 2nd home stamp duty on , so it will cost me about £7000 (including normal stamp duty), which is harsh but thems-the-rules I guess.
So I'm about £7000 down on 2nd home stamp duty.
I'm a higher rate tax payer, so I'm going to be paying 40% on the profits from the rent.
And I don't actually need the rent in my hand - Its more of a long term investment. Ideally to be saved until I have a 25% deposit for another house to rent etc etc until I have 5-6 houses. I wouldn't expect to take anything out of the company except expenses until I retire/ quit working in IT.
Seems to me like I'd be better off forming a limited company, transferring both rental houses into it.
Then I'd be able to claim back the £7000 in 2nd home stamp duty charges - although about £1500 would probably be lost to conveyancing costs
Any thoughts? Am I mistaken in anything I've suggested?
I was self-employed until recently, so I'm familiar with running a limited company
Is it any more difficult to get a mortgage for a limited company than it is as a personal BTL mortgage? More expensive?
Will most all-of-market mortgage brokers have access to both sides?
Thanks for reading.
0
Comments
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ptrichardson wrote: »Then I'd be able to claim back the £7000 in 2nd home stamp duty charges -
Whatever makes you think you'd be able to do that?0 -
sparky130a wrote: »Whatever makes you think you'd be able to do that?
If you dispose of your additional houses within a certain dealine (3 years rings a bell), you can reclaim the 2nd home stamp duty that you paid.
Moving the houses into a limited company would fulfill this requirement, and they are no longer owned by "me".
Here is the form: https://www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties0 -
ptrichardson wrote: »If you dispose of your additional houses within a certain dealine (3 years rings a bell), you can reclaim the 2nd home stamp duty that you paid.
Moving the houses into a limited company would fulfill this requirement, and they are no longer owned by "me".
Here is the form: https://www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties
Limited companies pay the 3% SDLT surcharge on any residential property they purchase, even if it is the first and only one they own.
So even if you can claim your surcharge back, the company will then have to pay it.0 -
You pay CGT when you "sell" the houses to the LTD Co. though, so potentially a big tax hit?0
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gingercordial wrote: »Limited companies pay the 3% SDLT surcharge on any residential property they purchase, even if it is the first and only one they own.
So even if you can claim your surcharge back, the company will then have to pay it.
Ah really? I missed that. I thought it didn't kick in until £125k?0 -
Crashy_Time wrote: »You pay CGT when you "sell" the houses to the LTD Co. though, so potentially a big tax hit?
There'd be little profit in those sales to the Limited company. Not enough to blow our CGT allowence, anyway0 -
ptrichardson wrote: »If you dispose of your additional houses within a certain dealine (3 years rings a bell), you can reclaim the 2nd home stamp duty that you paid.
Moving the houses into a limited company would fulfill this requirement, and they are no longer owned by "me".
Here is the form: https://www.gov.uk/government/publications/stamp-duty-land-tax-apply-for-a-repayment-of-the-higher-rates-for-additional-properties
Your bell is ringing incorrectly. Please read HMRC's Guidance Note which has also been linked to in the other 1001 threads about the additional SDLT on this forum.0 -
Your bell is ringing incorrectly. Please read HMRC's Guidance Note which has also been linked to in the other 1001 threads about the additional SDLT on this forum.
Yep, I hadn't seen that at all. Pretty annoying, but such is life.
Although I can still save money doing it.
House 1 - £60k
House 2 - £85k
House 3 - £170k
Currently, I'm paying the SDLT on houses 1 and 3. If I sell them to limited companies, I'd pay it on 1 & . I'd save about £2500, which would be enough to cover the costs of the transfer, but not much else.
Bah. its a kick in the pants when you're trying really hard to make something of yourself.0 -
Are you moving them in to a Ltd because of S24? If so, you may get a shock following the budget or some time in the near future.0
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