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    • Skag
    • By Skag 6th Dec 17, 2:27 PM
    • 201Posts
    • 16Thanks
    Skag
    Buying a property partly using own Ltd
    • #1
    • 6th Dec 17, 2:27 PM
    Buying a property partly using own Ltd 6th Dec 17 at 2:27 PM
    I want to buy a property using party my own Ltd and partly my own "name" and my wife's. Say I get an annual income in my Ltd of £100k per year and have a £30k personal income from other sources. Would I be better off buying a property with a mortgage 100% in my company?
    I would ideally like to fund it using all 3: company, me, wife. Can this be done? i.e. a company to have a percentage of a property? I would think yes, but don't know.
    Or would it be a case of me and wife giving a loan to the Ltd, and then purchasing the property in the Ltd 100% ?
Page 1
    • AdrianC
    • By AdrianC 6th Dec 17, 2:31 PM
    • 15,700 Posts
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    AdrianC
    • #2
    • 6th Dec 17, 2:31 PM
    • #2
    • 6th Dec 17, 2:31 PM
    Your accountant really is the best person to answer that.
    • Skag
    • By Skag 6th Dec 17, 3:35 PM
    • 201 Posts
    • 16 Thanks
    Skag
    • #3
    • 6th Dec 17, 3:35 PM
    • #3
    • 6th Dec 17, 3:35 PM
    Ok I thought anyone relative here might have a quick answer.
    • 00ec25
    • By 00ec25 6th Dec 17, 5:06 PM
    • 5,557 Posts
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    00ec25
    • #4
    • 6th Dec 17, 5:06 PM
    • #4
    • 6th Dec 17, 5:06 PM
    what does this company do? can it buy property?

    assuming the property will be the home you live in, it would be suicidally tax inefficient for a company that you control to own it as "you'd" face ongoing benefit in kind tax as well as one offs for SDLT and eventual CGT
    • theartfullodger
    • By theartfullodger 6th Dec 17, 5:55 PM
    • 9,110 Posts
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    theartfullodger
    • #5
    • 6th Dec 17, 5:55 PM
    • #5
    • 6th Dec 17, 5:55 PM
    Is this some cunning plan to save on tax? If so many might suggest it be hardly patriotic...
    • silvercar
    • By silvercar 6th Dec 17, 6:18 PM
    • 36,195 Posts
    • 152,958 Thanks
    silvercar
    • #6
    • 6th Dec 17, 6:18 PM
    • #6
    • 6th Dec 17, 6:18 PM
    The company could give you a loan in order for you to fund the deposit and purchase it in your name. You'd have to account for the loan of course, but that's the most logical way.
    • eddddy
    • By eddddy 6th Dec 17, 6:44 PM
    • 5,536 Posts
    • 5,224 Thanks
    eddddy
    • #7
    • 6th Dec 17, 6:44 PM
    • #7
    • 6th Dec 17, 6:44 PM
    Is this some cunning plan to save on tax? If so many might suggest it be hardly patriotic...
    Originally posted by theartfullodger
    I'm not sure if that's a joke or not, but on that basis... putting money into an ISA to save on tax is unpatriotic.

    Parliament intended that companies should be taxed differently to individuals (just like parliament intended that ISAs should save tax for individuals).

    Perhaps it's 'unpatriotic' to do things which Parliament didn't intend/foresee in order to save tax. But I don't think that's the case here.


    Ok I thought anyone relative here might have a quick answer.
    Originally posted by Skag
    It depends on...
    • what you want to achieve
    • what you want to use the property for
    • what your plans are many years into the future,
    • your personal circumstances and your wife's personal circumstances.
    • 00ec25
    • By 00ec25 6th Dec 17, 7:58 PM
    • 5,557 Posts
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    00ec25
    • #8
    • 6th Dec 17, 7:58 PM
    • #8
    • 6th Dec 17, 7:58 PM
    The company could give you a loan in order for you to fund the deposit and purchase it in your name. You'd have to account for the loan of course, but that's the most logical way.
    Originally posted by silvercar
    superb method to ensure the OP incurs a section 455 Benefit in Kind income tax charge on an outstanding loan from the company
    • Skag
    • By Skag 7th Dec 17, 10:57 AM
    • 201 Posts
    • 16 Thanks
    Skag
    • #9
    • 7th Dec 17, 10:57 AM
    • #9
    • 7th Dec 17, 10:57 AM
    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?
    • Doozergirl
    • By Doozergirl 7th Dec 17, 11:15 AM
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    Doozergirl
    If it’s your house then you need to take the money out of the company and buy the house in your own name. If the company owns the house and you live in it, then you will be paying tax personally for as long as you live in it on the “benefit in kind” and any money you make when selling will be subject to Corporation tax instead of being tax free as your personal home.

    You should speak to your accountant. In fact you probably should have spoken to your accountant about your intentions a couple of years ago to work out the most tax efficient way of taking money out of the company, but there you go.
    Everything that is supposed to be in heaven is already here on earth.
    • ACG
    • By ACG 7th Dec 17, 11:54 AM
    • 15,879 Posts
    • 8,133 Thanks
    ACG
    You would not get a residential Mortgage. You could possibly buy it for cash (assuming that is an option) but it seems a very expensive way of doing it.

    The company would be liable for CGT on the increase in value, as far as I am aware as an individual you would not. That is an expensive bill when you come to sell.

    Also what happens if your limited company gets sued? You risk losing your home.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • 00ec25
    • By 00ec25 7th Dec 17, 12:24 PM
    • 5,557 Posts
    • 4,948 Thanks
    00ec25
    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?
    Originally posted by Skag
    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
    Last edited by 00ec25; 07-12-2017 at 12:29 PM.
    • AdrianC
    • By AdrianC 7th Dec 17, 12:25 PM
    • 15,700 Posts
    • 14,015 Thanks
    AdrianC
    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?
    Originally posted by Skag
    It isn't YOUR money. It's the company's money.
    If the company buys you something for your own use, that's a benefit-in-kind, and taxable. The asset remains the company's, though, and the money from future sale would be the company's money. The company would be your landlord, with all the legal requirements upon it.

    For the money to become your money, the company needs to pay you it - and that's taxable.
    • agrinnall
    • By agrinnall 7th Dec 17, 1:27 PM
    • 18,703 Posts
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    agrinnall
    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.
    • Skag
    • By Skag 7th Dec 17, 4:19 PM
    • 201 Posts
    • 16 Thanks
    Skag
    I am starting contracting now, and haven't yet talked to my accountant (will do in the next few days :-) )
    I just thought I'd run it past here to hear on some views.
    • agrinnall
    • By agrinnall 7th Dec 17, 4:24 PM
    • 18,703 Posts
    • 14,416 Thanks
    agrinnall
    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.
    • Skag
    • By Skag 7th Dec 17, 4:37 PM
    • 201 Posts
    • 16 Thanks
    Skag
    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.
    Originally posted by agrinnall
    I don't really care whether you are convinced Just think that there are contracting jobs out there that offer anything from 500-800 pounds per day.
    • Doozergirl
    • By Doozergirl 7th Dec 17, 4:50 PM
    • 24,053 Posts
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    Doozergirl
    You haven’t even stared earning it yet? Dear Lord.

    Get yourself an accountant and ask them the questions. That’s what they are there for.
    Everything that is supposed to be in heaven is already here on earth.
    • silvercar
    • By silvercar 7th Dec 17, 5:25 PM
    • 36,195 Posts
    • 152,958 Thanks
    silvercar
    superb method to ensure the OP incurs a section 455 Benefit in Kind income tax charge on an outstanding loan from the company
    Originally posted by 00ec25
    Not if you repay the loan within 9 months of your company's year end.
    • 00ec25
    • By 00ec25 7th Dec 17, 6:24 PM
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    00ec25
    Not if you repay the loan within 9 months of your company's year end.
    Originally posted by silvercar
    indeed, but you did not qualify your statement with that condition did you
    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
    Last edited by 00ec25; 08-12-2017 at 8:49 AM.
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