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  1. #11

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    A 1/3 of companies are now offering loans to SPVS

    Here's the list

    Limited Company Buy to Let Mortgage Rates | Mortgages for Business

    These are quite good loans to be honest.

    Now setting up a new SPV Ltd, still requires that the Director gives a personal loan, plus they will still look at your income. So not sure if any Contractors have done this versus Permies with a decent income.

    Think this is now the way forward in a number of ways.
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  2. #12

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    They are just a broker and seem to be keeping the lenders pretty close to their chest. You can only imagine there are more they don't deal with as well.
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    So one mistake I made in
    My calculations yesterday was with SDLT. I was under the impression LTD companies did not pay the extra 3% but found that is not the case.

    So the main benefit is just around the tax.
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    Quote Originally Posted by MarillionFan View Post
    So one mistake I made in
    My calculations yesterday was with SDLT. I was under the impression LTD companies did not pay the extra 3% but found that is not the case.

    So the main benefit is just around the tax.
    Wasn't that the conclusion every time it's mentioned here?
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    Quote Originally Posted by northernladuk View Post
    Wasn't that the conclusion every time it's mentioned here?
    As may be. But as Chimp kicked one off I'm waiting for an answer for him hopefully with some real world examples.

    Methinks there is a good pension opportunity here. I notice your input previously on other threads has been to tulip on the idea initially before spouting some nonsence about accountants. Looking for a real player here thanks NLUK.
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  6. #16

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    Playing devil's advocate here, but with the top two examples on that website, yes the difference in tax liability is massive...but mainly because in option 1 the individual owns the property, in option 2 a company does. If at some point further down the line the individual wants to get their hands on the property (or cash from selling it), they're likely going to pay a huge chunk in tax then. Ie it's predominantly delaying rather than saving tax.

    Also, who's to say that the recently introduced rules restricting BTL mortgage interest tax relief for higher earners won't be ported across to Ltd Cos? There's a reasonable expectation by many on here that public sector IR35 changes were used as a "test" before pushing into the private sector too...does the same logic not hold for interest restriction rules? Who knows, but it's not a crazy though.

    Plus you mention stamp duty, do be aware that's any time the asset is "sold". So as an example, you go for this plan now, a Ltd Co buys several BTL properties. Then in a year or two, the chancellor changes the rules to clobber Ltd Co BTL companies. What's your next move? Reluctantly accept it? Or then transfer the properties into your personal name (not only then incurring most of the personal tax you delayed at the outset, but also stamp duty again)?

    I'm not saying it's definitely a bad idea, but do ensure you consider the cons as well as the pros before jumping in head first.

  7. #17

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    Quote Originally Posted by Maslins View Post
    Playing devil's advocate here, but with the top two examples on that website, yes the difference in tax liability is massive...but mainly because in option 1 the individual owns the property, in option 2 a company does. If at some point further down the line the individual wants to get their hands on the property (or cash from selling it), they're likely going to pay a huge chunk in tax then. Ie it's predominantly delaying rather than saving tax.

    Also, who's to say that the recently introduced rules restricting BTL mortgage interest tax relief for higher earners won't be ported across to Ltd Cos? There's a reasonable expectation by many on here that public sector IR35 changes were used as a "test" before pushing into the private sector too...does the same logic not hold for interest restriction rules? Who knows, but it's not a crazy though.

    Plus you mention stamp duty, do be aware that's any time the asset is "sold". So as an example, you go for this plan now, a Ltd Co buys several BTL properties. Then in a year or two, the chancellor changes the rules to clobber Ltd Co BTL companies. What's your next move? Reluctantly accept it? Or then transfer the properties into your personal name (not only then incurring most of the personal tax you delayed at the outset, but also stamp duty again)?

    I'm not saying it's definitely a bad idea, but do ensure you consider the cons as well as the pros before jumping in head first.
    Good article in this months Money Observer which has a couple of pieces. One on BTLS in Ltd companies and the best approach. The second is to be aware of what could happen to investments / tax relief if Corbyn gets in, to whit you points above could be valid.
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  8. #18

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    Quote Originally Posted by MarillionFan View Post
    Loans Between Limited Companies For Property Investment | Optimise Accountants

    Checked CUK first, but was now looking at the same.

    Thinking of the same. Looking to setup an SPV with funds personally and from my LTD with a view to purchase a number of properties, utilizing new SPV Mortgages. Planning to pay back personal loans over 5 years. Trying to work out the best pension angle.

    Chimp, care to update the thread please
    Hi MF

    I didn't proceed with the property development plan. Was proving to be too needy on 3 fronts: financial, time and stress.

    I did a lot of research, however, and the optimal structure would have been to create a holding company that would own the IT Co and the Property SPV. The Holding would need to buy the IT Co shares but you would claim for relief on the capital gain crystallized on this transaction.

    Dividends could then be shifted from IT Co > Holding Co > Property Co. As the dividends aren't coming out of the corporate structure to you personally, there would be no income/dividend tax due on this move of funds.

    BTW Optimise are my property accountants.

    Other options are to use loans directly from IT Co to Property Co. This incurs interest costs but no 'penalty' for long-term loans, i.e. section 455, which only applies to director's loans. Bear in mind that an outstanding loan needs to be repaid (or written off and tax paid) before you can liquidate/MVL the IT Co.

    I've read on other posts here that the IT Co could own the Property SPV directly and pay dividends to it. This structure was never proposed to me but perhaps it complicates MVL, so it didn't interest me.

    Going back to the main option of the Holding Co: I am still looking at this as a longer term option, in that I could move my property portfolio into a SPV owned by the Holding Co. The IT Co would then move funds across (dividends) to the Holding Co > Property SPV, which I could use to pay off the mortgages. This would eventually give me my pension fund in the form of low/no mortgage BTLs held in the SPV. On retirement I would simply liquidate the IT Co but keep the SPV.

    Transferring personally-held properties into a SPV can incur SDLT and CGT, but incorporation relief is available if you can demonstrate specific rules. One such rule is that you treat your properties as a business and not as an investment, and that you spend a certain amount of time on the business each week. I would advise reading into this as SDLT and CGT can make this whole plan prohibitive.

    Good luck.

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