can you set up a company, transfer house to it, then rent to yourself

The_White_Horse

and claim tax relief on the interest?

Thrugelmir

You would need approval of lender to transfer ownership.

michaels

I guess it would make sense if you charged yourself minimal rent so pretty much the entire interest bill was a tax loss? However it would have to be a btl mortage so the rate would be a lot higher than you can get for owner occupier so possibly destroying your savings even for a 40% taxpayer.

CLAPTON

I don't know but

maybe cgt when the company sells the property
benefits in kind for directors/owners if let at non commercial rent
corporation tax if it makes a profit

chewmylegoff

michaels wrote: »

I guess it would make sense if you charged yourself minimal rent so pretty much the entire interest bill was a tax loss? However it would have to be a btl mortage so the rate would be a lot higher than you can get for owner occupier so possibly destroying your savings even for a 40% taxpayer.

If you did that then the difference between the peppercorn rent and the market rate rent would be a taxable benefit in kind (attracting both income tax for you and employers national insurance) so no point. Also the loss that you created could only be offset against other rental profits.


You'd be better off remortgaging your house and using the proceeds to invest into a BTL property. You can offset the interest on the mortgage on your original home against the income from the BTL.

RUN_RABBIT_RUN

what does any of this have to do with lefty scum?

Generali

The_White_Horse wrote: »

and claim tax relief on the interest?

If you can, and it's a pretty clear attempt to rort the system, the set up costs would be high. You'd have to pay someone to do the conveyancing and then there's SDLT payable on the market value (not the sale price) of the house.

You'd have exit costs too as any increase in the value of the house if/when you came to sell would be liable to CGT.

chewmylegoff

Generali wrote: »

If you can, and it's a pretty clear attempt to rort the system, the set up costs would be high. You'd have to pay someone to do the conveyancing and then there's SDLT payable on the market value (not the sale price) of the house.

You'd have exit costs too as any increase in the value of the house if/when you came to sell would be liable to CGT.

You definitely can do this, I am 100% certain that it is legal (obv need your mortgage company onside) there is just no point.

If you pay market rate rent to the company, and the offset the mortgage interest against tax in the company, what have you gained? Nothing - you had to pay the rent out of post tax income so all you've achieved is to stupidly transfer some of your taxed income into a company and potentially subjected yourself to another tax charge on the same money if it exceeds the mortgage interest...

If you rent the property from the company at below market rent then there is a tax charge on both you and the company - again you lose out. You can do it with a company which is controlled by someone else and probably avoid the tax charge, but they may decide they'll kick you out and keep the property.

grizzly1911

And pay to set up the company and pay an accountant to cook the books (if they will) on to of all the other points mentioned.

chucknorris

As others have said I can't see what you would achieve, I don't think that you could 'transfer' your house to a limted company, wouldn't you have to sell it and pay stamp duty plus legal fees? I must admit though I am no expert on limited companies, so open question to the forum:

Is there a way to 'transfer' an asset to a limted company rather than actually sell?

System

It's not uncommon, but it's usually into a trust, not a company.

There are complicated reasons, in certain circumstances for living in a house as beneficiary of a trust rather than as owner, such as inheritance tax planning, but you need a) to pay for proper advice and b) to be wealthy so that there is actually any gain to offset the costs.