Investing in own limited company

Jaco70

Usual apologies about this post probably being in the wrong location......
My situation. I own a small limited company (not property related) which is solvent and debt free, and some BTL properties personally (some mortgaged, some owned outright). I looked into (online only, I don’t want to involve my accountant at this stage) putting the properties into a separate limited company, to pay corporation tax, but this doesn’t seem straightforward and so I’ll carry on as I am. If/when I buy any more houses I’d like to do it via a new company, but can I simply pay personal funds into a new company without any undue implications? i.e. start a ltd co, open a bank account, put 50k in? To raise mortgages thru a company, I’d need deposits obviously. I’m familiar with directors loans as I’ve done this for my other business in years gone by, but I’m talking about a non repayable start up investment. 

ACG

You can transfer ownership of the properties into the limited company, but there is some case law against HMRC where there needs to be 10 properties in order to avoid CGT and/or stamp duty - sorry it was a while back I read it so dont recall the details. 

Speak to your accountant - why would you not involve them at the outset? Mortgages for limited companies are possible but the limited company needs to be set up specifically for the purpose of buying property. The rates are also higher. Get the professional advice upfront, it may just help you decide whether to invest time moving forward or not/

Thrugelmir

Speak to your accountant. All sorts of factors need to be considered. 

K_S

Jaco70 said:

 If/when I buy any more houses I’d like to do it via a new company, but can I simply pay personal funds into a new company without any undue implications? i.e. start a ltd co, open a bank account, put 50k in? To raise mortgages thru a company, I’d need deposits obviously. I’m familiar with directors loans as I’ve done this for my other business in years gone by, but I’m talking about a non repayable start up investment. 

@jaco70 I'm no accountant, and these thoughts are just based on what I've seen clients do.

A few ways that I've seen this done -

- start up a new ltd co SPV with the right SIC code, use only for holding the BTL properties

- make a loan from the director to the SPV. This is used as a deposit for the purchase and to cover expenses such as SDLT, etc. When the rent comes in, the loan from the director is repaid using the cashflow.
OR
- the director's trading ltd. co. makes a loan from their retained profits to the SPV ltd. Co. and this cash is used to make the purchase. The number of lenders that allow this source of deposit is lower than the above route.
OR

- what you have mentioned doing. Set up the SPV with paid up equity of (say) £50k which is used for the purchase. Tbh I've never seen any of my clients go down this route. There's probably a good reason for it that I don't know.

As ACG said, you want to get an accountant's advice sooner rather than later. Also make sure you do your sums to check return as ltd.co. interest rates are significantly higher than that for personal BTL mortgages. 

tacpot12

There is no reason not to use a different accountant for the property company if you want to. 

lonibra

Some good advice on here. I would say you should certainly consider a different accountant or make sure your current account has experience advising on limited company buy to let. 

dunstonh

We have a number of property owners that have moved to limited companies.   Indeed, our accountant also did this with his own property portfolio.   It can be viable but there are issues to be aware of.   The accountant will be the key person to speak to.  And if a new limited company is involved, they will be effectively pitching themselves for the business. So, a lot of the advice about structure and pros/cons will be free.