already own a property but want to let it

saajan_12

andyinlondon wrote: »

Pixie the loan should be repaid at about 7% but with minimal income tax as it is a loan repayment until it is repaid, then it would become income with a tax liability but that is 10 years or so away.

andyinlondon wrote: »

The company i have in mind would not have the cash to buy outright or need to raise finances as the idea is to loan the company the house as a capital investment and the company would then pay the loan investment back as it gathered revenue. -Do you own the property outright to be able to sell / loan the property? Do you mean
a) sell the property for £x to the company and issue a private mortgage with £0 deposit and the full balance to be paid in monthly installments, or
b) loan the property on a head lease to the company, charging rent
This way until the capital loan is repaid i should have no income tax liability except for the interest part of the repayments, apparently i have to charge interest on the capital loan.- you can set the interest at £0. But the company would have income tax liability on the rental income. The capital loan repayments are not a deductible expense (only interest portion, but then you pay income tax personally on that amount)
I am asking if this is a sensible way forward or would i be better off letting it as a private landlord or just selling it.

Whether it's a property with a good rental market is a whole other question. If it is, then loaning the value to a company which rents it out means
* Company pays SDLT on the purchase price (even if they pay this in installments) at additional rate
* You pay CGT on the market value (less any reliefs for when it was your home / let and your annual allowance)
* Company pays income tax on rental income rather than you paying personally
* Once loan is paid off, company will start building up money from rental income. Company pays income tax on this, and if you ever want to extract the money from the company, you pay dividend tax on the money again.

00ec25

saajan_12 wrote: »

Company pays income tax on this, and if you ever want to extract the money from the company, you pay dividend tax on the money again.

companies pay corporation tax not income tac. CT is currently 19%

Pixie5740

Pixie5740 wrote: »

Ok so you'd be paying income tax on the loan interest and the limited company would be paying income tax on the rental income. Does that work out less expensive than you paying income tax on the rental income? You still haven't said what girls you expect the property to achieve as a rental.

I take it the property is unencumbered ie there's no mortgage outstanding presently?

:rotfl: :rotfl: :rotfl: :rotfl: :rotfl:


I meant yield.

andyinlondon wrote: »

Pixie the local council are offering a 10 year rental / lease agreement with a monthly payment of £720 and they grantee the rent even if empty, they also will return it in the same condition as they receive it, ie any damage made good ect.
the house is unencumbered.

What's the value of the property? £720pcm is a decent gross yield if the property is worth £50k but is pretty pants if the property is valued at £200k. How does the £720pcm from the council compare with private rental prices for similar properties in the area?


Are you happy to give up complete control of the property for 10 years? Will you still be responsible for repairs and maintenance over and above any damage the tenant(s) may cause which the council will apparently make good? What happens if you want/need to sell the property within that 10 year period or live in it yourself?


You have provided next to nothing in the way of figures but my gut feeling is that for a single property, which you already own, it will not be worth setting up a limited company.