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Tax-efficient way to buy first flat

szyblaszczyk
szyblaszczyk Posts: 108 Forumite
First Anniversary First Post
in House buying, renting & selling
Hello! I'm new in the group and have a few really urgent questions as my and my girflriend are in the middle of the process of buying post-auction flat for cash (about 35 000) as it wasn't sold.

1. We are first time buyers. How should we buy first property to save on taxes? Privately or through limited company (for example?)?
2. We are working in full-time job through agency. Should we buy together or seperately? Does it matter in terms of taxes?
3. To sum up: can you recommend us the BEST way to save on taxes?

We'd really aprreciate your help!
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Comments

  • tacpot12
    tacpot12 Posts: 7,943 Forumite
    First Anniversary Name Dropper First Post
    Buying privately is the cheapest way to one property. A company might save you money once you start buying more than a couple of properties.

    It doesn't matter from a tax perspective whether you by jointly or alone. I would suggest you agree what will happen to the property and the money you have both invested in it if you ever split up. Talk to a solicitor about how you can make this a legally binding agreement under UK law.

    I can't think of any way to reduce tax when buying a property other than to avoid properties where stamp duty is payable.
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • sal_III
    sal_III Posts: 1,953 Forumite
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    If this is your first property and you plan to live in it - just buy it privately, at £35'000 no SDLT is payable.

    If it's an investment that you plan to let out, you might want to look at buying it through a limited company. SDLT will be payable on the purchase, but you might "save" some tax on the rent in the future. And I say "save" as it's not exactly saving as "deferring" for a later date of your choosing when you decide to pay out dividends or spend the profit on another property.
  • szyblaszczyk
    szyblaszczyk Posts: 108 Forumite
    First Anniversary First Post
    Sorry guys, I didn't mention it will be the investment property. Buy, renovate and sell within a few weeks/months.
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  • hazyjo
    hazyjo Posts: 15,470 Forumite
    First Anniversary Name Dropper First Post Photogenic
    Very unlikely anyone will get a mortgage on it if you've owned it for less than 6 months (longer with some lenders).
    2023 wins: *must start comping again!*
  • sal_III
    sal_III Posts: 1,953 Forumite
    First Anniversary First Post
    If plan to do this again in the near future, likely a limited company is the better option. If it's a one-off, for that amount, personally I wouldn't bother and just do it privately.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    Name Dropper First Post Photogenic First Anniversary
    How are you funding the purchase?
  • sal_III
    sal_III Posts: 1,953 Forumite
    First Anniversary First Post
    Pixie5740 wrote: »
    How are you funding the purchase?
    With cash apparently
    szyblaszczyk wrote: »
    my and my girflriend are in the middle of the process of buying post-auction flat for cash (about 35 000) as it wasn't sold.
  • macman
    macman Posts: 53,088 Forumite
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    Just to clarify, neither you nor your girlfriend already own a property, or a share of a property, in the UK?
    And you do mean a price of £35K, not £350K?
    No free lunch, and no free laptop ;)
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
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    sal_III wrote: »
    With cash apparently

    Yes but whose cash? The OP's? His girlfriend's? Both of them?
  • martindow
    martindow Posts: 10,214 Forumite
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    Often places are in an auction for a reason. Assuming it is £35k this could imply that the number of years on the lease is very low. The OP's scheme to quickly do it up and sell on at a profit might not succeed if prospective buyers can't get a mortgage on it.
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