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  • FIRST POST
    • funnymonkey
    • By funnymonkey 16th Jun 17, 10:17 AM
    • 62Posts
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    funnymonkey
    Bemifits of rental property as ltd company
    • #1
    • 16th Jun 17, 10:17 AM
    Bemifits of rental property as ltd company 16th Jun 17 at 10:17 AM
    Can anyone please tell me what are the benefits of putting your rental property into a ltd company?
    My mother wants to protect her rental property from care home costs should the situation arise later in life.
    She has extensive savings tor this eventaality but wishes to lie what her options are.
    I thank you in advance for your relpies
Page 1
    • Guest101
    • By Guest101 16th Jun 17, 10:24 AM
    • 15,128 Posts
    • 14,763 Thanks
    Guest101
    • #2
    • 16th Jun 17, 10:24 AM
    • #2
    • 16th Jun 17, 10:24 AM
    Well she'd still have assets as the owner of a company?


    I think it depends on how many properties we're talking about?


    AND - if she has plenty of savings the council wont go after the house.
    • Pixie5740
    • By Pixie5740 16th Jun 17, 10:27 AM
    • 11,104 Posts
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    Pixie5740
    • #3
    • 16th Jun 17, 10:27 AM
    • #3
    • 16th Jun 17, 10:27 AM
    Estate planning is not something one should attempt to DIY especially going by your other threads. Your mother needs to seek professional advice.

    Just off the top of my head I can think of deliberate deprivation of assets and Capital Gains Tax being just two issues with your mum setting up a limited company. There will be many more.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • funnymonkey
    • By funnymonkey 16th Jun 17, 10:29 AM
    • 62 Posts
    • 8 Thanks
    funnymonkey
    • #4
    • 16th Jun 17, 10:29 AM
    • #4
    • 16th Jun 17, 10:29 AM
    She's got 2 rental properties valued at approx £500,000 for both but she's worried about once her savings are exhausted as she wishes to protect the properties she's saved all her life for

    Thank you
    • Guest101
    • By Guest101 16th Jun 17, 10:32 AM
    • 15,128 Posts
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    Guest101
    • #5
    • 16th Jun 17, 10:32 AM
    • #5
    • 16th Jun 17, 10:32 AM
    She's got 2 rental properties valued at approx £500,000 for both but she's worried about once her savings are exhausted as she wishes to protect the properties she's saved all her life for

    Thank you
    Originally posted by funnymonkey


    So I should pay for her care? Just wondering.


    You said she had ample savings for this, but she doesn't now? with-in 10 minutes she's spent some of it? <confused>
    • Pixie5740
    • By Pixie5740 16th Jun 17, 10:33 AM
    • 11,104 Posts
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    Pixie5740
    • #6
    • 16th Jun 17, 10:33 AM
    • #6
    • 16th Jun 17, 10:33 AM
    Not worried enough to go and pay for professional advice though.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Guest101
    • By Guest101 16th Jun 17, 10:34 AM
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    Guest101
    • #7
    • 16th Jun 17, 10:34 AM
    • #7
    • 16th Jun 17, 10:34 AM
    Not worried enough to go and pay for professional advice though.
    Originally posted by Pixie5740

    I just wonder what some people think savings are for?


    I remember when people used to save for a rainy day, now it seems to be just to keep forever - may aswell put it in your mattress.
    • Keep pedalling
    • By Keep pedalling 16th Jun 17, 11:05 AM
    • 3,939 Posts
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    Keep pedalling
    • #8
    • 16th Jun 17, 11:05 AM
    • #8
    • 16th Jun 17, 11:05 AM
    Your mother must be really dumb to think that should she ever need care, she will get LA funded care to the standard that a self funder sitting on £1/2M of assets will have access to.

    I am willing to bet that much of that £500k has come from house price inflation rather than hard work, so even if putting her properties into a limited co. could benefit her in some way, it would also trigger an instant capital gains tax bill for herself.
    • teddysmum
    • By teddysmum 16th Jun 17, 12:06 PM
    • 8,517 Posts
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    teddysmum
    • #9
    • 16th Jun 17, 12:06 PM
    • #9
    • 16th Jun 17, 12:06 PM
    Don't ltd companies also have to pay an accountant to check the books etc ?
    • teddysmum
    • By teddysmum 16th Jun 17, 12:09 PM
    • 8,517 Posts
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    teddysmum
    I don't see why those of us who would also like to pass our assets to our children, but will have to use them to pay for care ,should advise someone with much larger assets on how to shield their assets and avoid paying for care.
    • 00ec25
    • By 00ec25 16th Jun 17, 12:23 PM
    • 5,354 Posts
    • 4,697 Thanks
    00ec25
    go and get professional advice, you keep asking general questions and then start a new thread without finishing off the details of the last one or answering the questions asked. You asked how much CGT you'd pay if you sold, yet now you don't want to know the figure because you have had another idea? An idea which, incidentally, will also require you to pay CGT....

    you claim to have 2 properties yourself which you let whilst you live in a 3rd, and you are now asking for advice on what your mother can do with her 2 properties whilst she lives in a caravan park. You are also thinking of emigrating and cashing in your pension according to one of your threads.

    you need to see an IFA (independent financial adviser) for a proper, detailed, report on your options
    Last edited by 00ec25; 16-06-2017 at 12:28 PM.
    • Guest101
    • By Guest101 16th Jun 17, 12:59 PM
    • 15,128 Posts
    • 14,763 Thanks
    Guest101
    Don't ltd companies also have to pay an accountant to check the books etc ?
    Originally posted by teddysmum
    its adviseable, but you don't have to
    • saajan_12
    • By saajan_12 16th Jun 17, 1:01 PM
    • 962 Posts
    • 652 Thanks
    saajan_12
    The company would still be an asset with a value = house values + cash in the company though. I would think it would either be treated as mum having the company as an asset, or treated as deprivation of assets by gifting the houses to the company - either way, she wouldn't get care paid for.

    Re other pros and con's
    - company set up and admin costs
    - if houses have mortgages, how would the company raise funding?
    - company pays 20% corporation tax on the rental income, plus mum would need to eventually get that money out of the company.. paying herself a salary / dividend would incur income tax again, resulting in likely higher tax bill than if she owned the houses outright.

    I don't see the benefit..
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