Buying home through my Limited Company, advice please

shottsguy22

I’m looking to buy a house which we will probably live in. I currently own a house that we live in so according to the estate agent if I bought a “second home” I’d be liable to pay and additional 8% fee.

I should also say I’m in Scotland. This is all totally new to me, I have a limited company registered with Companies House and my accountant has advised to buy the new home through the company. I’d probably be looking to put a large deposit probably 30% of the cost of the house and take a mortgage for the rest. 

Any help would be appreciated, what’s the best way to do it? Can anyone recommend a broker to use for the mortgage etc ? Any advice would be amazing 

user1977

Correct that the LBTT would be less if the company is the buyer - but if you need a mortgage, your problem will then be finding a lender willing to lend to a company (which is to be the residence of the shareholder of the company). It isn't a normal thing.

What are you planning to do with the first property? You get the 8% back if/when you sell the first property (if within 3 years of the date of entry for the second one).

(also you might want to change the subject line, as it doesn't sound like you are buying a home from a limited company)

shottsguy22

Thanks I’ve updated the title ! What’s the best option then would you suggest ? I read online I could get a business mortgage but that’s obviously wrong info 

SDLT_Geek

user1977 said:

Correct that the LBTT would be less if the company is the buyer - but if you need a mortgage, your problem will then be finding a lender willing to lend to a company (which is to be the residence of the shareholder of the company). It isn't a normal thing.

What are you planning to do with the first property? You get the 8% back if/when you sell the first property (if within 3 years of the date of entry for the second one).

(also you might want to change the subject line, as it doesn't sound like you are buying a home from a limited company)

Is it correct that the LBTT would be less if a company buys?  That does not sound right to me.

user1977

SDLT_Geek said:

user1977 said:

Correct that the LBTT would be less if the company is the buyer - but if you need a mortgage, your problem will then be finding a lender willing to lend to a company (which is to be the residence of the shareholder of the company). It isn't a normal thing.

What are you planning to do with the first property? You get the 8% back if/when you sell the first property (if within 3 years of the date of entry for the second one).

(also you might want to change the subject line, as it doesn't sound like you are buying a home from a limited company)

Is it correct that the LBTT would be less if a company buys?  That does not sound right to me.

Nope, sorry, you're right. So either the accountant is misguided on that point, or there is some other advantage.

shottsguy22

user1977 said:

SDLT_Geek said:

user1977 said:

Correct that the LBTT would be less if the company is the buyer - but if you need a mortgage, your problem will then be finding a lender willing to lend to a company (which is to be the residence of the shareholder of the company). It isn't a normal thing.

What are you planning to do with the first property? You get the 8% back if/when you sell the first property (if within 3 years of the date of entry for the second one).

(also you might want to change the subject line, as it doesn't sound like you are buying a home from a limited company)

Is it correct that the LBTT would be less if a company buys?  That does not sound right to me.

Nope, sorry, you're right. So either the accountant is misguided on that point, or there is some other advantage.

I think the LBTT would be less from what I’ve seen on the Scottish Government website ? If I buy as an individual I’ve been told it’s 8% I’d pay 

user1977

shottsguy22 said:

user1977 said:

SDLT_Geek said:

user1977 said:

Correct that the LBTT would be less if the company is the buyer - but if you need a mortgage, your problem will then be finding a lender willing to lend to a company (which is to be the residence of the shareholder of the company). It isn't a normal thing.

What are you planning to do with the first property? You get the 8% back if/when you sell the first property (if within 3 years of the date of entry for the second one).

(also you might want to change the subject line, as it doesn't sound like you are buying a home from a limited company)

Is it correct that the LBTT would be less if a company buys?  That does not sound right to me.

Nope, sorry, you're right. So either the accountant is misguided on that point, or there is some other advantage.

I think the LBTT would be less from what I’ve seen on the Scottish Government website ? If I buy as an individual I’ve been told it’s 8% I’d pay 

No, it applies to every purchase of a residential property by a company as well: https://revenue.scot/taxes/land-buildings-transaction-tax/lbtt-legislation-guidance/additional-dwelling-supplement-ads-technical/ads-rules-particular-transactions-buyers#LBTT10017

Hoenir

shottsguy22 said:

I’m looking to buy a house which we will probably live in. 

Are you planning on charging yourself a commercial rent? 

_Penny_Dreadful

shottsguy22 said:

I’m looking to buy a house which we will probably live in. I currently own a house that we live in so according to the estate agent if I bought a “second home” I’d be liable to pay and additional 8% fee.

I should also say I’m in Scotland. This is all totally new to me, I have a limited company registered with Companies House and my accountant has advised to buy the new home through the company. I’d probably be looking to put a large deposit probably 30% of the cost of the house and take a mortgage for the rest. 

Any help would be appreciated, what’s the best way to do it? Can anyone recommend a broker to use for the mortgage etc ? Any advice would be amazing 

I’d get a new accountant. The company will pay the additional dwelling supplement as the link user1977 provided shows. You’ll also need to pay the full commercial rent if you choose to live in the property yourself or you’ll be taxed as if it’s a fringe benefit. Then, when you come to sell the property there’ll be no Private Residence Relief and the sale will be subject to corporate tax which is currently 25%. If the limited company requires a mortgage to purchase your new home, good luck finding a lender who will lend for these circumstances. 

People do use limited companies for property, I do myself, but generally speaking it’s for investment properties not your primary residence. 

shottsguy22

Thanks everyone for your help with this, I’m going to have a call with him today as his advice doesn’t sound right. I wasn’t planning on charging a commercial rent no