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Should I put my properties in an Ltd company or keep them in my name?
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I bought a BTL inside a Ltd company. It made sense, not least because the money was already in the company (as a trading profit), so avoided paying personal tax to get the money out of the company to invest personally. The advantage wouldn't have been so great if the money was already in my name.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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I bought a BTL inside a Ltd company. It made sense, not least because the money was already in the company (as a trading profit), so avoided paying personal tax to get the money out of the company to invest personally. The advantage wouldn't have been so great if the money was already in my name.
This came up the other day at work, someone claimed that you had to buy cash, and could not get a mortgage on a company? May I ask how you did it if you did not pay cash?0 -
I bought a BTL inside a Ltd company. It made sense, not least because the money was already in the company (as a trading profit), so avoided paying personal tax to get the money out of the company to invest personally. The advantage wouldn't have been so great if the money was already in my name.
Likewise, it follows that if the long term plan is to re-invest BTL profit in further BTL then they will be better off in Ltd Co having only suffered 20% CT (or less in future).0 -
This came up the other day at work, someone claimed that you had to buy cash, and could not get a mortgage on a company? May I ask how you did it if you did not pay cash?
What?
Companies borrow all the time for the purposes of investment - why should buying a property to rent out be any different?
A mortgage is the same as any other borrowing, remember, albeit secured on a valuable asset.0 -
This came up the other day at work, someone claimed that you had to buy cash, and could not get a mortgage on a company? May I ask how you did it if you did not pay cash?
Banks usually request a personal guarantee which defeats one of the advantages of a limited company. A limited company if it has debts that cannot be repaid can become insolvent, the company liquidated and the remainder of the debts written off. The directors or the shareholders are not normally liable for that debt.:footie:Regular savers earn 6% interest (HSBC, First Direct, M&S)
Loans cost 2.9% per year (Nationwide) = FREE money.
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This came up the other day at work, someone claimed that you had to buy cash, and could not get a mortgage on a company? May I ask how you did it if you did not pay cash?What?
Companies borrow all the time for the purposes of investment - why should buying a property to rent out be any different?
A mortgage is the same as any other borrowing, remember, albeit secured on a valuable asset.
You can get mortgages through a limited company. The rate is slightly higher (my bank quoted 0.3% higher than their standard BTL rate). Some banks will give more flexibility on security, particularly if you have built up a relationship with the bank.Banks usually request a personal guarantee which defeats one of the advantages of a limited company. A limited company if it has debts that cannot be repaid can become insolvent, the company liquidated and the remainder of the debts written off. The directors or the shareholders are not normally liable for that debt.
Understand the motivation for doing a BTL through a company. It is to reduce tax liabilities, it isn't to default on debts and write the company off! Nothing wrong with giving a personal guarantee if you have made sensible investment decisions that you are happy to stand by. Anyway in terms of being responsible for the borrowing, what is different between buying it in your own name and giving a personal guarantee for the company loan?I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Ah thank you for this company info. One lady I know was going to but she only had 3 rentals and claims it was not worth it, and needed 4 to break even - but this was 9 years ago. Another chap has 5 but also does it bog standard.0
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True, but the company often can. Which then, the principal shareholder can then take out of the company in the form of dividends.
Are you aware that the letting of residential properties is exempt from VAT? If the business has no VATable activities, It cannot register for VAT.
Are you aware that when a VAT registered business pays for something, it pays the VAT inclusive price. They don't get to claim the VAT back unless there are taxable supplies exceeding the value of the taxable purchases.
VAT is not sales tax. There is no option to pay the VAT exclusive price at the till.
Whether a business operates as a corporation or not is also entirely irrelevant for VAT purposes. Sole traders and partnerships for example can (and sometimes must) also register for VAT."Real knowledge is to know the extent of one's ignorance" - Confucius0 -
I have worked with may high earners - many over 100k, ok that may not be high to you. No, I am not one of those. Yes it is 'tax advice' in the loosest sense of the word.
Secondly it is a forum, containing a collection of ideas, methods, and some possibly unknowingly outdated information, sounds like you may not have grasped this idea yet?
I do not know, or know of you, but I do bow down to your superior tax knowledge.
I believe no one any reads any web page, and thoughtless actions anything blindly without any professional advice.
I'm sorry, but it's much simpler if you just don't answer the question if you don't know."Real knowledge is to know the extent of one's ignorance" - Confucius0
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