Starting BTL Portfolio

delboy42

I'm planning on starting a LTD company (SPV) with the aim to build a portfolio of 10 properties and hopefully more but initially this is my target to begin. I have one property I rent out already which is in my personal name which has a mortgage of £93,000 and is currently worth around £185,000. My residential property mortgage is £30,000 and is worth around £325,000. I'm a Gas / Heating engineer and run my own Ltd company. My idea is to open a new LTD company and loan £20,000 from my existing Heating company and maybe refinance my rental property and my residential property to give me more money for deposits on the new LTD company properties. 

I have lots of experience in property renovations and have all the required trades covered through either family or friends as i'm in the trade. I also have a great relationship with a local Letting Agent as my heating company covers all their Gas/ plumbing work.

Any advice anyone has for the best way for me tax wise to start my new venture and any other advice would be greatly received!

Thanks in advance 
James 

steampowered

Since you are asking about being "tax wise", I feel that it is important to point out to that buy-to-let is about the worst thing you can do from a tax point of view.

By far the most tax efficient option will be for the company to contribute to your pension. This will get you a credit and corporation tax, and remove national insurance. If you tot it all up those reliefs are worth 38.8%. 

So, you could put £138.8k into your pension compared to £100k into your buy-to-let.

Plus, your pension will generate stock market returns (on average 7.5% per year), plus you won't have all the tax associated with getting the rent out of the company.

You should also consider making the most of your personal stocks & shares ISA allowance.

TheCuriousSausage

Be careful investing in pensions as well. I have just taken my pension and found my AVC's (and more) have been completely wiped out by the LTA being exceeded. What a waste of money that was!

AdrianC

delboy42 said:

Any advice anyone has for the best way for me tax wise to start my new venture and any other advice would be greatly received!

What does your accountant suggest?

AdrianC

TheCuriousSausage said:

Be careful investing in pensions as well. I have just taken my pension and found my AVC's (and more) have been completely wiped out by the LTA being exceeded. What a waste of money that was!

I'm really surprised at somebody with a million quid pension pot not having any half-way competent professional advice.

K_S

@delboy42 You certainly appear to tick a lot of boxes to enter this line of business and be successful at it. If you are intending to build a significant portfolio over time, I would suggest that you invest in advice from a property accountant (not all accountants have the expertise) who deals with portfolio landlord clients to set it up in a manner that is best suited for your circumstances and future plans.

It'll usually cost between £400-1,000 and might seem like something you can do yourself but I've heard innumerable times from my clients who said they wished they'd set up properly in the first instance.

To build your own knowledge, this book is quite good as well - "Using a Property Company to Save Tax" by Carl Bayley

dimbo61

You appear to have most of the requirements except the Deposit money.
LTD company mortgages normally require bigger deposits as the lenders want 30/35% deposits so overall lending of 65%
You need to look for properties you can add value too.
What king of tenant are you looking for ?

Grumpy_chap

AdrianC said:

TheCuriousSausage said:

Be careful investing in pensions as well. I have just taken my pension and found my AVC's (and more) have been completely wiped out by the LTA being exceeded. What a waste of money that was!

I'm really surprised at somebody with a million quid pension pot not having any half-way competent professional advice.

How exceptional or rare is reaching the LTA?

AdrianC

Grumpy_chap said:

AdrianC said:

TheCuriousSausage said:

Be careful investing in pensions as well. I have just taken my pension and found my AVC's (and more) have been completely wiped out by the LTA being exceeded. What a waste of money that was!

I'm really surprised at somebody with a million quid pension pot not having any half-way competent professional advice.

How exceptional or rare is reaching the LTA?

£1,073,100 currently. Per person.

Roughly what proportion of people do you think have a million quid pension pot?