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Need a bigger house!
beck1
Posts: 7 Forumite
Is anyone able to give me some advice on the best way of going about buying a larger house bearing in mind the following points:
My husband and I would like to get somewhere with an outbuilding that we could use for our 3-year-old business (we're currently working in the converted garage of our existing end-of-terrace), in order to grow the business but still work from home.
We don't want the business to own the house as we don't want our home to be wrapped up with the business.
Our thoughts were to get the business to pay rent, which would be a regular monthly income for us on a personal level - therefore may be able to get a bigger mortgage to afford the type of place that we need. This, however would mean we would have to start paying income tax - currently myself and my husband each receive a salary below the minimum threshold (£4,800pa), and then receive £12,000pa in non-taxable dividends.
We have already been advised that the business would not be able to pay rent on our existing situation, because it we are in a residential area and the council would not approve it as a business premises. We could go for a place that could be classed as a place of business - a kennels or smallholding for example so that the business could pay rent somehow, but this would decrease the amount we could afford on monthly repayments due to having to pay income tax.
The business could increase our dividend payments and pay no rent - would this be the best option? I guess there would be no council rates for it to pay then either. Will a mortgage company take us seriously with the relatively small incomes we currently have and all the figures excluding tax? (I guess if you were to add tax & NI on at 25% we would both be on £21,000 - but I'm not sure mortgage companies see it like this) - our business isn't doing too badly though and seems to be growing well - would anyone take this into account?
Can anyone suggest anything? We just don't have the kind of salaries that a mortgage lender would say OK to on a personal level at the moment. I think we would need about £350,000, and currently have a £100,000 mortgage payable over the next 17 years, and about £45,000 equity.
My husband and I would like to get somewhere with an outbuilding that we could use for our 3-year-old business (we're currently working in the converted garage of our existing end-of-terrace), in order to grow the business but still work from home.
We don't want the business to own the house as we don't want our home to be wrapped up with the business.
Our thoughts were to get the business to pay rent, which would be a regular monthly income for us on a personal level - therefore may be able to get a bigger mortgage to afford the type of place that we need. This, however would mean we would have to start paying income tax - currently myself and my husband each receive a salary below the minimum threshold (£4,800pa), and then receive £12,000pa in non-taxable dividends.
We have already been advised that the business would not be able to pay rent on our existing situation, because it we are in a residential area and the council would not approve it as a business premises. We could go for a place that could be classed as a place of business - a kennels or smallholding for example so that the business could pay rent somehow, but this would decrease the amount we could afford on monthly repayments due to having to pay income tax.
The business could increase our dividend payments and pay no rent - would this be the best option? I guess there would be no council rates for it to pay then either. Will a mortgage company take us seriously with the relatively small incomes we currently have and all the figures excluding tax? (I guess if you were to add tax & NI on at 25% we would both be on £21,000 - but I'm not sure mortgage companies see it like this) - our business isn't doing too badly though and seems to be growing well - would anyone take this into account?
Can anyone suggest anything? We just don't have the kind of salaries that a mortgage lender would say OK to on a personal level at the moment. I think we would need about £350,000, and currently have a £100,000 mortgage payable over the next 17 years, and about £45,000 equity.
0
Comments
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I understand you're allowed to receive up to £4,800 rental income from your (or someone else's) company tax free...
Please check with your accountantMike
Expat in Australia, but heading back to the UK when the dust settles.0
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