Purchasing a flat - half company funds, half personal funds?

[AnotherGuy]

Hi there,

This might be a completely stupid question and even a very bad idea. No, I didn't ask my accountant as at this point this is just a very blurry idea and not saying I'm going to do it.

Is it possible, and would it make sense, to purchase a BTL flat without mortgage, using half the funds coming from the LTD and the other half coming from personal savings?

The reason for this is I have enough money to comfortably purchase if combining funds from personal savings and LTD (distributable) profits, and might be more advantageous to do so without extracting the LTD profit via dividends (as it will be a fair big chunk and maybe less tax-efficient).

As I say, just an idea

[northernladuk]

Well I guess at least it makes the question of which is most efficient way to buy a BTL redundant at least.....

[Lance]

Hi there,

This might be a completely stupid question and even a very bad idea. No, I didn't ask my accountant as at this point this is just a very blurry idea and not saying I'm going to do it.

Is it possible, and would it make sense, to purchase a BTL flat without mortgage, using half the funds coming from the LTD and the other half coming from personal savings?

The reason for this is I have enough money to comfortably purchase if combining funds from personal savings and LTD (distributable) profits, and might be more advantageous to do so without extracting the LTD profit via dividends (as it will be a fair big chunk and maybe less tax-efficient).

As I say, just an idea

Sounds complex. HMRC doesn't like complexity.

Why not decide whether you want to own it, or your company?
If you then pay some tax to get the money out. If the company then put some capital in? That would make your company no longer a PSC though so check with accountants and lawyers what that impact is.

Or create a new company where your LTD is 50% shareholder and you are a 50% shareholder.

Gut feel tells me to make it your own rather than company's.

[AnotherGuy]

Well, there are 3 main reasons why I would like to do this.

a) I want to move fast and knock down asking prices, so being a "cash buyer" is to my advantage.
b) I might have problems getting a BTL mortgage however small due to the fact I'm a FTB and I don't own any other properties.
c) Even if a mortgage is successful, I think it wouldn't be cost-effective for the amount of money I will be borrowing.

This is along the lines I was thinking:

Or create a new company where your LTD is 50% shareholder and you are a 50% shareholder.

But as you say, it seems complicated and maybe even less tax-efficient.

Not that I'm doing this only to be tax-efficient (that's nice to have of course) but mainly because the fact I have the money but not in one place.

[DallasDad]

With 50% Deposit surely you would not have a problem getting a mortgage?
How many years account do you have?
It can't be that bad getting one now can it?

[Lance]

I'm a FTB and I don't own any other properties.

Not that I'd encourage anyone to do any fraudulent behaviour.... If I was to do such a thing I would suggest you consider buying it with a normal mortgage, pretend you do live there, and thus evade income tax and capital gains.

I wouldn't encourage that of course as it's immoral. Highly unlikely to get caught mind.

*DON'T DO IT - IT's ILLEGAL AND COULDRESULT IN YOU EATING PORRIDGE FOR A FEW MONTHS