Buy to Let, Let to Buy and Limited Companies

steampowered

ptrichardson wrote: »

Bah. its a kick in the pants when you're trying really hard to make something of yourself.

No, it is just making you pay tax at the same rate as anybody else. There is no logical reason why you should be able to save stamp duty by buying property through a 100% owned company so I am glad HMRC have thought about this.

gettingtheresometime

Would you even be able to do this ?


If the ltd is a legal separate entity, then even if the shareholders are you and your wife, isn't the company that would have to own them and hence have the mortgage on them?


What would be the existing income of the company to show it could afford the repayments?

lovinituk

Crashy_Time wrote: »

What kind of shock?

That the tax relief on mortgage interest might be removed from Ltd companies as well.

Crashy_Time

lovinituk wrote: »

That the tax relief on mortgage interest might be removed from Ltd companies as well.

That would be a shock.

MyOnlyPost

lovinituk wrote: »

That the tax relief on mortgage interest might be removed from Ltd companies as well.

With the government already cosying up to corporate investment with their housing white paper, cutting the tax relief on borrowing for limited companies would seem counter intuitive.

silvercar

gettingtheresometime wrote: »

Would you even be able to do this ?


If the ltd is a legal separate entity, then even if the shareholders are you and your wife, isn't the company that would have to own them and hence have the mortgage on them?


What would be the existing income of the company to show it could afford the repayments?

If the company owns the property, then the mortgage would need to be taken out by the company.

The income to justify the mortgage payments would be the rental income.

Existing income would not necessarily be required - that is how companies that only rent out property operate. If the company is new, the lender may require personal guarantees from the directors.

ptrichardson

silvercar wrote: »

If the company owns the property, then the mortgage would need to be taken out by the company.

The income to justify the mortgage payments would be the rental income.

Existing income would not necessarily be required - that is how companies that only rent out property operate. If the company is new, the lender may require personal guarantees from the directors.

That's how I saw it. Seems pointless now anyway.

As per usual, by the time I'm in a position to do anything, the older generation have raped it to bits and new legislation has been put in place to nerf it for the rest of us.
The irony being that this was a plan to fix my pension, since the older generation have !!!!!!ed that up for us too with their ridiculously big pensions.

Pixie5740

ptrichardson wrote: »

That's how I saw it. Seems pointless now anyway.

As per usual, by the time I'm in a position to do anything, the older generation have raped it to bits and new legislation has been put in place to nerf it for the rest of us.
The irony being that this was a plan to fix my pension, since the older generation have !!!!!!ed that up for us too with their ridiculously big pensions.

So it would be alright to continue "raping it to bits" as long as you were able to join in too?

You've already taken one property out of circulation for buyers and now you want to keep your current home whilst buying another home so you'll be taking yet another home out of circulation for buyers but everything is the fault of the older generation? I smell hypocrisy.

As a higher rate tax payer is BTL even the right investment vehicle for your retirement plan? As a basic rate tax payer is it even the right investment vehicle for your wife? What other avenues have you explored? Is your current home one that a) that tenants would want to rent, and b) generates a decent return?

steampowered

ptrichardson wrote: »

The irony being that this was a plan to fix my pension

This doesn't sound like a good idea to me.

The key thing to bear in mind is that a standard private pension is not an investment. It is simply a wrapper within which you hold other types of investments.

The wrapper gives you tax benefits in exchange for locking away the money until you retire, but doesn't dictate the performance of the underlying investment.

You seem to be very cross that you aren't able to avoid stamp duty by buying through a company. Stamp duty would be completely pointless if you could avoid it simply by paying the £20 cost of incorporating a company.

Yet the tax benefit of investing through a pension would far exceed the impact of stamp duty. As you are a higher rate tax payer you'd be getting an instant 40% uplift on everything you put into your pension through tax relief.

The best way to fix your pension is by paying as much as you can into it and getting the tax relief. BTL won't magically fix your pension, particularly as you are a higher rate tax payer.

Crashy_Time

MyOnlyPost wrote: »

With the government already cosying up to corporate investment with their housing white paper, cutting the tax relief on borrowing for limited companies would seem counter intuitive.

It could be done in a way to discourage small landlords though?