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Tentative Early Thoughts - Has anyone gone the Ltd route to Buy To Let?

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    Tentative Early Thoughts - Has anyone gone the Ltd route to Buy To Let?

    Just after some very general advice/words of experience really. It appears that going BTL through a Ltd company is now the way forwards and it's something I want to look towards doing in the next 6 - 12 months or so. At this point I'm just interested to hear from those who have actually done or tried it. Did you form a separate entity, share your contracting co (Don't think you can do this?) or start a subsidiary. What're the major hurdles and pain points?

    Just for interest, my plan is to effectively have a break even situation in the medium term - just using rent to pay the mortgage and cover any costs. My real goal is to have the asset at the end - having had someone else pay for it day to day, basically. The theory being that I can then use that in my later years as equity.

    #2
    I'm interested in this. I haven't started researching this yet but it's in my list to do.
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      #3
      Special Purpose Vehicle seems to be the way to go for doing this via a Ltd. Set it up and have Your Co. lend it the money for the purchase on appropriate repayment terms.

      I'm not an accountant nor a mortgage adviser though.
      "Being nice costs nothing and sometimes gets you extra bacon" - Pondlife.

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        #4
        No right/wrong answer, but I think my opinion as things stand:
        - if you want to build and expand a BTL portfolio, keeping LTV high, releasing equity when available to put as deposits on new properties, an SPV Ltd Co may be your best option.
        - if you want to only buy very infrequently, with little reliance on mortgages (either buying cash, or with short term mortgages that you try to clear down quickly), my view would be still buy personally.
        - not a good idea to buy through your existing contracting company. Partly due to risk (eg you make a mistake in your contracting work that's not covered by insurance and you get sued, if your BTL assets are in that company they're at risk), partly due to blurring the line between trading/investment, which can have tax implications.

        As an accountancy firm, it's not a market we're looking to get into, but I imagine there will be growing popularity for the mini group structure, with two companies in it, one doing the contracting, the other investing in BTLs.

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          #5
          Tentative Early Thoughts - Has anyone gone the Ltd route to Buy To Let?

          I agree with maslins. The mini-group structure is something that seems to be growing with our clients. In interest if not necessarily in action, at least for now, but I expect this to change.

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            #6
            Originally posted by Alan @ BroomeAffinity View Post
            I agree with maslins. The mini-group structure is something that seems to be growing with our clients. In interest if not necessarily in action, at least for now, but I expect this to change.
            Agree also.

            Spoke to my IT accountant about it recently. My portfolio is all personal at this time and I may in the future move it to Ltd and make use of certain allowances to negate the CGT and SDLT on transfer. Will speak to my property accountant when the need arises.

            For new property purchases I would go Ltd as you can claim all expenses and run it like a business. An inter-company loan from your IT Ltd to your BTL Ltd can be used to purchase the properties - though I'm not sure how a lender would feel about that loan being used for the deposit.

            As far as I know the inter-company loan would not be subject to S455 taxation so long as you are a participator in both companies. And again from what I've read, interest doesn't have to be paid on the loan. These 2 factors differentiate an inter-company loan from a director's loan.

            The use of an inter-company loan could affect your ability to claim ER on your IT Ltd if you should want to in the future, due to it "investing" in the property company.

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              #7
              Originally posted by ChimpMaster View Post
              Agree also.

              Spoke to my IT accountant about it recently. My portfolio is all personal at this time and I may in the future move it to Ltd and make use of certain allowances to negate the CGT and SDLT on transfer. Will speak to my property accountant when the need arises.

              For new property purchases I would go Ltd as you can claim all expenses and run it like a business. An inter-company loan from your IT Ltd to your BTL Ltd can be used to purchase the properties - though I'm not sure how a lender would feel about that loan being used for the deposit.

              As far as I know the inter-company loan would not be subject to S455 taxation so long as you are a participator in both companies. And again from what I've read, interest doesn't have to be paid on the loan. These 2 factors differentiate an inter-company loan from a director's loan.

              The use of an inter-company loan could affect your ability to claim ER on your IT Ltd if you should want to in the future, due to it "investing" in the property company.

              I am currently looking into this too. I was informed by a specialist property accountant that it was possible to structure SPV company without affecting trading company ER. I was quoted £2k for whole process including 1st year accounts. As for the interest on loan, I was advised it is always best to charge interest but you can set it very low.

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                #8
                Surely in the next budget or the one after, the chancellor will be applying the same BTL taxation to companies as well as individuals? Seeing as this was an obvious consequence of Osborne's policy on BTL, it is odd that he didn't bring all BTL under the same rules, corporate or not?
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                  #9
                  Originally posted by Fred Bloggs View Post
                  Surely in the next budget or the one after, the chancellor will be applying the same BTL taxation to companies as well as individuals? Seeing as this was an obvious consequence of Osborne's policy on BTL, it is odd that he didn't bring all BTL under the same rules, corporate or not?
                  He just wanted to hurt individual buyers, he didn't want to offend large companies with large portfolios, remember there are companies who have millions or billions investment in properties. I think he will even offer them better deal now ( going from May's thread to lower taxation and deregulate companies etc) but am aware they may have exceptions specifically to target small companies like they did with VAT.

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                    #10
                    What's everyone's thought on Brexit and investing in properties, if many Europeans suddenly leave - there will be a lot of empty properties around, and I expect rent will go down as not as much demand.

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