How to purchase - Holiday Let

Lucys_Da

Hi a couple of queries. My parents and I are looking to purchase a Holiday To Let. I am unsure how best to proceed.

Option 1 is to buy the property through a property company we own. Basically my parents and I would loan the property company an equal sum of money. The property company is a limited company with my parents and two other siblings being shareholders.

Option 2 is that my parents or I purchase the property as individuals. 

The pros and cons as I see it are as follows:

- If I purchase the property then as I am a higher rate tax payer returns will be taxed at 40%
- I am not a homeowner at present so it is my understanding is that there may be no stamp duty. 

- If my parents purchase the property and we decide to take some of the money out that we loaned to the company then my parents will have a mortgage on the property and as they are in the 70’s I’m not sure that it’s fair for that to be the case (naturally the mortgage would only be taken out once a level of return is identified and only an amount that is affordable would be taken out).
- If the property is bought in my parents or my name how would we all protect/separate our investments?

- Are there any bother benefits or risks associated with the various options or points I raised above?

I posted something similar before, but it was a complicated post and I hope the queries I have raised above are simpler to answer and fingers crossed someone can offer a bit of advice.

SDLT_Geek

What a confused post!
Are you saying the property you want is already held by a limited company, a special purpose vehicle, and one option is for the shares in the company to be bought, rather than the property itself?

Lucys_Da

SDLT_Geek said:

What a confused post!
Are you saying the property you want is already held by a limited company, a special purpose vehicle, and one option is for the shares in the company to be bought, rather than the property itself?

Apologies if you find it confusing. The property is on the open market so it is the property itself that is being purchased - sorry I thought my initial statement in the first paragraph was clear about that (obviously not!) 

SDLT_Geek

Lucys_Da said:

Hi a couple of queries. My parents and I are looking to purchase a Holiday To Let. I am unsure how best to proceed.

Option 1 is to buy the property through a property company we own. Basically my parents and I would loan the property company an equal sum of money. The property company is a family business with my parents and two other siblings being shareholders.

Option 2 is that my parents or I purchase the company as individuals. 

The pros and cons as I see it are as follows:

- If I purchase the company then as I am a higher rate tax payer returns will be taxed at 40%
- I am not a homeowner at present so it is my understanding is that there may be no stamp duty. 

- If my parents purchase the company and we decide to take some of the money out that we loaned to the company then my parents will have a mortgage on the property and as they are in the 70’s I’m not sure that it’s fair for that to be the case (naturally the mortgage would only be taken out once a level of return is identified and only an amount that is affordable would be taken out).
- If the property is bought in my parents or my name how would we all protect/separate our investments?

- Are there any bother benefits or risks associated with the various options or points I raised above?

I posted something similar before, but it was a complicated post and I hope the queries I have raised above are simpler to answer and fingers crossed someone can offer a bit of advice.

I have put in bold the bits that suggest you or your parents might buy a company.  Perhaps you want to edit your post?

Lucys_Da

SDLT_Geek said:

Lucys_Da said:

Hi a couple of queries. My parents and I are looking to purchase a Holiday To Let. I am unsure how best to proceed.

Option 1 is to buy the property through a property company we own. Basically my parents and I would loan the property company an equal sum of money. The property company is a family business with my parents and two other siblings being shareholders.

Option 2 is that my parents or I purchase the company as individuals. 

The pros and cons as I see it are as follows:

- If I purchase the company then as I am a higher rate tax payer returns will be taxed at 40%
- I am not a homeowner at present so it is my understanding is that there may be no stamp duty. 

- If my parents purchase the company and we decide to take some of the money out that we loaned to the company then my parents will have a mortgage on the property and as they are in the 70’s I’m not sure that it’s fair for that to be the case (naturally the mortgage would only be taken out once a level of return is identified and only an amount that is affordable would be taken out).
- If the property is bought in my parents or my name how would we all protect/separate our investments?

- Are there any bother benefits or risks associated with the various options or points I raised above?

I posted something similar before, but it was a complicated post and I hope the queries I have raised above are simpler to answer and fingers crossed someone can offer a bit of advice.

I have put in bold the bits that suggest you or your parents might buy a company.  Perhaps you want to edit your post?

Sorry I can only assume spell checker or guesser was at work - been a long day and my checking of the original post obviously wasn’t very thorough.