Should i set up a company?

lalman

Hello all,

I work in London - a higher rate tax payer and have a rental property in my old home town... my long term aim is to buy a number of these 'cheaper' properties so I can move back and live on the rental income... and do developments. This is a 5-10 year plan so nothing immediate... but I am getting clobbered with tax on the rent on the property I currently have (via self assessment).

Do you recommend I set up a company and put the property in there? if so, what are the tax advantages and how would I benefit from them? Also, how would I do this? As I said I am looking to buy a number of properties and don't require the cashflow from them at all... would prefer if they were just re-invested back into the 'business'.

Thanks in advance.

AdrianC

TBH, if - as you've said in previous threads - you've got business accounts with £60-300k always in them, then I'm really not sure you should need to ask this here. Your accountant will be able to help you in much more detail.

sinizterguy

You need to really sit down and work out whether it is worth it. There is no catch all answer.

I think, to put into the company, you will have to pay a much higher SDLT.

If there is a mortgage on the property, the lender will not allow the property to be held in a limited company. You will need a new commercial agreement - possibly with only 50% lending.

If bought with cash, and you're happy for the money to accumulate in the company, over a rather long term, you could benefit - but only if you're not a higher rate tax payer when the money exits the company. Also, if you're holding only a single property, and you plan to reinvest (without further investment into the company from outside), the money is going to accumulate rather slowly.

When selling, you *may* have a reduced pool of buyers.

I've only looked into it superficially. Enough to work out that it isn't right for me at this time.

Cautious_Optimist

lalman wrote: »

Hello all,

I work in London - a higher rate tax payer and have a rental property in my old home town... my long term aim is to buy a number of these 'cheaper' properties so I can move back and live on the rental income... and do developments. This is a 5-10 year plan so nothing immediate... but I am getting clobbered with tax on the rent on the property I currently have (via self assessment).

Do you recommend I set up a company and put the property in there? if so, what are the tax advantages and how would I benefit from them? Also, how would I do this? As I said I am looking to buy a number of properties and don't require the cashflow from them at all... would prefer if they were just re-invested back into the 'business'.

Thanks in advance.

Do you own the property you live in in London?

You could raise an interest only mortgage against your rental property, then put that money into your own PPR in London.

Interest then tax deductible.

Are you putting ALL your possible rental property expenses against your income tax bill?

bris

There are no tax advantages on residential properties in companies. To roll profits over to other projects you need to be developing commercial properties.


As for your tax advantages if you are who you claim to be then you must surely have an accountant to ask advice about tax.