Renting a property to live in from own limited company

noddy967

If a Buy-to-let Limited Company that I own buys a property, could I rent it personally from that company (to live in)?

If this is legally feasible, are they any major drawbacks?

My situation is a little complex, with my personal income tied into a property my ex-wife lives in. Looking for a option to purchase a house to live in. I have 2 buy-to-lets as a sole trader, but am weighing up the benefits of transferring them to a limited company.

anselld

You seem to be over complicating things.

Having 2 BTL properties does not make you a sole trader. Rental income is not a trade it is an investment.

When you have finished weighing up the benefits of transferring these into Limited Company you will probably find there are none by the time you have factored extracting the income from the Company. However there are penalties to be incurred in CGT and SDLT on transfer.

As for buying a property as Limited and renting it to yourself, not impossible but finance would be problematic unless you have the cash in full and again it begs the question why would you want to?

Guest101

It's perfectly legal, except the properties are not owned by a ltd company, so if you have a mortgage - it's not going to happen

insured

There is no problem with renting a property from your own company, but the company will of course pay tax on the rent, so there may be tax due, whereas if you just rented a property from a third party then it would be for them to declare the rent.
The other issue is, that if you pay less than market rent to your own company, there will be a deemed distribution on the difference between market rent and rent paid. So you may face another tax liability.
As anselld has said, there will be tax considerations on buying property through a limited company which I am sure you have thought about.

Guest101 wrote: »

It's perfectly legal, except the properties are not owned by a ltd company, so if you have a mortgage - it's not going to happen

I have never seen anyone on this board give as much rubbish advice as you. You appear to have thought yourself an expert on any number of topics which you appear to know nothing about.
Of course the limited company owns the property even though there is a mortgage on it. There will be a charge on the property but the company will still own it. A charge on a property is massively different from owning the property.

marksoton

insured wrote: »

I have never seen anyone on this board give as much rubbish advice as you. You appear to have thought yourself an expert on any number of topics which you appear to know nothing about.

That's a bit strong and really not factually accurate.

booksurr

insured wrote: »

I have never seen anyone on this board give as much rubbish advice as you. You appear to have thought yourself an expert on any number of topics which you appear to know nothing about.

when you have answered over 11,000 questions as Guest has, you too may be "guilty" of giving concise answers which do not explain (for the umpteenth time) exactly how everything works in great detail given the recurring nature of some questions, especially BTL and tax ones

insured wrote: »

Of course the limited company owns the property even though there is a mortgage on it. There will be a charge on the property but the company will still own it. A charge on a property is massively different from owning the property.

Guest's answer is the obvious one: the company would need to finance the purchase either through a mortgage in its name or by a cash injection from its shareholders allowing it to purchase without mortgage. The company would be both the legal owner and beneficial owner for tax purposes - the latter having significant personal tax issues as mentioned by anselld

Your answer is ambiguous because the company cannot be the legal owner unless the OP has gifted the property to the company to start with. If the mortgage is not in the company's name, it must be in the OP's, in which case the purchase would have been in his personal name to start with, the exact situation OP appears to want to avoid ... so your advice is "not rubbish"?

Guest101

insured wrote: »

There is no problem with renting a property from your own company, but the company will of course pay tax on the rent, so there may be tax due, whereas if you just rented a property from a third party then it would be for them to declare the rent.
The other issue is, that if you pay less than market rent to your own company, there will be a deemed distribution on the difference between market rent and rent paid. So you may face another tax liability.
As anselld has said, there will be tax considerations on buying property through a limited company which I am sure you have thought about.



I have never seen anyone on this board give as much rubbish advice as you. You appear to have thought yourself an expert on any number of topics which you appear to know nothing about.
Of course the limited company owns the property even though there is a mortgage on it. There will be a charge on the property but the company will still own it. A charge on a property is massively different from owning the property.

Aww shucks, thanks


I think you missed the point, so ill break it down for you.


Currently he personally owns the properties (presumebely, with a mortgage)


If he then decides to sell this to his company, or gift or whatever his equity (the lender is still going to want to be paid!). That limited company, which just came into existence, would need financing (presumably via either a loan or a cash investment or whatever) - given that the company has zero accounts to date, will have virtually no income, and it's only assets will be the directors reduced rent home and one other. Which financial institution do you recommend the Op contacts to finance this? (dodgy dave down the pub?!)

theartfullodger

insured wrote: »

...................
I have never seen anyone on this board give as much rubbish advice as you. You appear to have thought yourself an expert on any number of topics which you appear to know nothing about..............

Sigh!

Might I 'umbly suggest you purchase a copy of

https://www.amazon.co.uk/How-Win-Friends-Influence-People/dp/0091906814

Guest - 10,000+ thanks from other members...

Insured - 101 thanks from other members...(at time of writing...)

Cheers all!