Stamp Duty Limited Company

Stuart91

csgohan4 - Yes you are correct, the mortgage rates are generally higher for a limited company. But as I commented earlier in the thread, we have had some mortgage advice and although a higher rate, it only actually makes a small difference in monthly mortgage cost to us compared to a ‘normal’ mortgage.

csgohan4

Stuart91 wrote: »

csgohan4 - Yes you are correct, the mortgage rates are generally higher for a limited company. But as I commented earlier in the thread, we have had some mortgage advice and although a higher rate, it only actually makes a small difference in monthly mortgage cost to us compared to a ‘normal’ mortgage.

if you loaned x money to the company for the deposit, would you be able to recover this from the company before corporation tax is applied?

OP your question has been asked before in the past but I am curious if it is financially viable, especially if you managed to accumulate enough in the company to be able to buy using the company?

00ec25

csgohan4 wrote: »

if you loaned x money to the company for the deposit, would you be able to recover this from the company before corporation tax is applied?

OP your question has been asked before in the past but I am curious if it is financially viable, especially if you managed to accumulate enough in the company to be able to buy using the company?

no the capital repayment element of a director loan is not an allowable (tax deductible) cost for the company in terms of its corp tax.

If the director charged the company interest, that interest is an allowable cost for the company, but of course is a personal (income) taxable item for the director. There are also limits on the interest rate to prevent "gaming"

csgohan4

00ec25 wrote: »

no the capital repayment element of a director loan is not an allowable (tax deductible) cost for the company in terms of its corp tax.

If the director charged the company interest, that interest is an allowable cost for the company, but of course is a personal (income) taxable item for the director. There are also limits on the interest rate to prevent "gaming"

In someways it may be more tax efficient to get money into the company via earnings rather than your own income to buy the house as you will likely be a 40% tax earner, whereas through the company, only 19% corp tax.

Of course it may take a while to accumulate enough to buy a house of course

00ec25

Stuart91 wrote: »

If this is possible this would work out cheaper for us than keeping the flat in our own names and paying the higher stamp duty rate on the new house.

yes it is possible

the answer to your question is go off and do the sums , they will tell if the right answer since you are aware of all the variables:
- no CGT on disposal of property to company since currently your main home (or if a small delay occurs presumably covered by your personal CGT allowance)
- property owned by a company does not mean its director is liable for additional rate SDLT on property purchases in his own name
- company gets interest rate relief on mortgage costs re rental income
- company pays corp tax on its (rental) profits
- depending on personal financial circumstances of the director, he may wish to take money out of the company as salary and/or dividends. Dividend being taxed lower than rental profit in personal name, as you know.
- when company disposes of the property it will not get CGT allowance, but by your own words, that will be so far in the future it is guesswork what the tax rules will be at that time and therefore what, if anything, impacts a company versus a person scenario.

00ec25

csgohan4 wrote: »

In someways it may be more tax efficient to get money into the company via earnings rather than your own income to buy the house as you will likely be a 40% tax earner, whereas through the company, only 19% corp tax.

Of course it may take a while to accumulate enough to buy a house of course

yes, but what "earnings" do you mean?

the company will be set up as a Special purpose vehicle (SPV) and therefore its only activity will be rental income. No rent = no earnings to accumulate.

you do not want to get into the complexity of a trading company also owning rental property

csgohan4

00ec25 wrote: »

yes, but what "earnings" do you mean?

the company will be set up as a Special purpose vehicle (SPV) and therefore its only activity will be rental income. No rent = no earnings to accumulate.

you do not want to get into the complexity of a trading company also owning rental property

Say your working as an IT consultant and you work and get paid via your own limited company, instead of taking out money keep it in to use it to buy a house for a BTL.

However you don't advise mixing a BTL with another trading occupation for the same company?

Stuart91

00ec25 - Thanks for your helpful input. I’m confident I know the different elements to consider to do my sums 👍🏼