Buying a mixed use commercial property on single freehold

columbo360

Hello,

My wife runs dance classes and we have found a nearby property which comprises of a ground floor commercial part, which would be used to run the dance classes from, and an upstairs residential flat, where we would live. The property is currently on one single freehold title.

As far as i'm aware we have 2 options to finance the purchase
1. Buy the whole property on a semi-commercial mortgage. For tax purposes we would then designate a proportion of the building as commercial and subsequently an amount of the mortgage interest repayments. This would apparently have to be a realistic amount as it could be subject to valuation from the district valuer.

2. Buy the whole property on a commercial mortgage in the name of the business. We would then lease the flat to ourselves from the business. I'm not sure though whether we could do this for say £1 a year, or whether again it has to be a realistic amount? If we could do this then presumably the entire mortgage interest payments would be tax deductable?

Please could someone advise whether this sounds correct, and also clarify the option of leasing the flat from the business. And also if there is a better way in terms of tax savings to purchase the property.

Thanks in advance

columbo360

Any ideas anyone?

heathcote123

columbo360 wrote: »

Any ideas anyone?

I think the taxman would have something to say about leasing it yourself for £1.00 a year.

Of course you'd need to speak to your accountant/solicitor, but common sense tells me if you lease it to ourself for anything less than market value, the taxman will see it as a taxable benefit (or we'd all be sticking out motgages on the company!)

theartfullodger

Ideas?? Yeah, sounds like you considering cheating the honest, decent, tax-paying citizen by cheating the system. .. Charming, don't think we want people like that in our country.


We'll what goes around comes around, so, if you do, expect consequential cheating of yourselves by others, and hopefully prosecution &/or fines by HMRC.

Cheers!

Artful

columbo360

Artful,
For someone with such strong views I'm confused by your username?

It's tax avoidance, not tax evasion. There's quite a difference. I think you'll find that practically every company will avoid paying uneccassary taxes, and I think you'll find that's what decent accountants get paid for.

So if any informed people (not you artful) could offer me advice it'd be greatly appreciated.

poppysarah

An accountant will give you personal advice about how to handle that side.
Get mortgage broker advice too.

theartfullodger

business_man wrote: »

Oh so you dont want people paying less tax but you want http://news.scotsman.com/politics/Two-out-of-three-benefit.6812028.jpand are probably one of those.

You're so kind.

For the record I receive only two benefits, winter fuel allowance & free 'bus pass, and would happily cooperate fully with the authorities if they ever wished to investigate my entitlement (I'm 63, male ..). No HB, no tax credits, no JSA, no DLA, no ESA, etc etc etc..

What I want is a country where people pull their weight & contribute their fair share.. Clearly, I appreciate there is some progress to make on those aspirations.. Benefit cheats?? In my view they should have any entitlement to further benefits suspended for 5 years, and be prosecuted with enthusiasm..

So business_man, what do you get from us the tax-payer eh??

Cheers!

heathcote123

columbo360 wrote: »

Artful,
For someone with such strong views I'm confused by your username?

It's tax avoidance, not tax evasion. There's quite a difference. I think you'll find that practically every company will avoid paying uneccassary taxes, and I think you'll find that's what decent accountants get paid for.

So if any informed people (not you artful) could offer me advice it'd be greatly appreciated.

I think you'll find its tax evasion if it's not declared. However, good luck, they'd only !!!! it up the wall on the olympics or northern rock bonuses.