Ltd Company and investment property

jazimus

Can anyone advise?
I borrowed a further £200K on my mortgage to finance a Short Term Rental property purchase in Florida. I lose around £20K pa in expenses against this property so had an idea.

If my Limited Company were to purchase the FL property I would not have to draw £20K pa extra and therefore save on income tax.

The company after purchase would absorb the £20K loss therefore saving corporation tax.

What would be the best way to do this in terms of tax and consolidating my finances?

1) Take out a commercial loan/mortgage (difficult and would have personal guarantee on my UK home) and pay off £200K on mortgage.

2) Loan the Ltd company the funds myself for it to buy the property (charging interest and having a first charge in case of default on loan).

3) Lease the property to my company and still own it myself thereby paying off mortgage with rental income.

Grateful of any ideas or experiences.
Thanks.

James_Trimby

Dont claim to be an expert in overseas stuff but I think you are barking up the wrong tree! Firstly I dont think you will get the corporation tax offset. I believe losses on foreign property can only be carried forward against future profits of same activities. Secondly is USA you would need to file a tax return for the "sale" and prove you made a loss otherwise they will want a percentage of the sales value.

Getting the finance to move the property is likely to be fun if you want to keep getting tax relief on the interest. PLUS if you use this home at all privately you are into alsorts of problems with Benefits in Kind legislation etc as well.

Companies Act will also need to be dealt with as buying an asset from connected party (shouldnt be a problem just extra costs eg UK soliciotor as well as a US one needed)

Finally when sold outside "family" the capital loss may be wasted in the company but as you are the holder of a company you might be able to utilise the loss in your own name against other assets of yours such as the shares. If sold at a profit personally you get better tax reliefs than the company for Capital gains tax (normally anyway!).
Based on limited info I would suggest you forget this and consider how you can try and reduce your losses and make sure you are paying as little tax as possible on the company "drawings" Sorry!