Buying a house with Company funds

[Spacecadet]

say you were to build up a healthy £200-300K reserves in the company account over the course of a few years, then with the cash buy a house (in cash), the house then being owned by the company.
Could you then rent the house from your own company to live in yourself?
What are the tax implications of this?

[THEPUMA]

It would not be exempt from CGT as it would if you owned it personally so would very rarely, if ever, be advisable.

The beenfit-in-kind calculations are not straightforward but, broadly, if you paid a market rent, there should be no income tax ramifications.

[Jason]

There are a couple of things here that I think you should consider.. usual disclaimer about not being accountant etc.

If your company owns the house and you rent it from the company, then the company will have to treat it like any other form of income.

Secondly, and I think this is the big one.. when the company finally sells the house, it will pay tax on any increased value of the house (profit made from selling it)

I think as long as the rental is in the normal market value for a similar house in a similar area, then it would not be seen as a company benefit to an employee, so I think there would be no personal tax implications.

I would go talk to the accountants on it.

[Denny]

say you were to build up a healthy £200-300K reserves in the company account over the course of a few years, then with the cash buy a house (in cash), the house then being owned by the company.
Could you then rent the house from your own company to live in yourself?
What are the tax implications of this?

I don't think a micro business/freelance operation can do this without it being seen as an investment company which is not for the purpose it was set up that states your business services with Companies House. A few people have enquired about this route in the past.

[Ardesco]

It has been talked about on these forums a fair few times in the past, yet I have never heard of anybody actually doing it......

That should give you all the information that you need to know.

[Denny]

It has been talked about on these forums a fair few times in the past, yet I have never heard of anybody actually doing it......

That should give you all the information that you need to know.

Any information you give is highly unlikely to tell anyone what they need to know.

[oracleslave]

Any information you give is highly unlikely to tell anyone what they need to know.

Didn't know you had it in you.

[Ardesco]

Any information you give is highly unlikely to tell anyone what they need to know.

And in steams Denny with the personal insults yet again..... I of course never help anybody, nor do I ever give sound advice and I must be completely wrong thinking that the whole idea of buying a house through your company as a wonderful tax dodge is a bad idea.

Please make sure that all future comments from me are either ignored or you do the opposite of what I tell you.

Grow up Denny

[Denny]

I of course never help anybody, nor do I ever give sound advice

Now that is a useful bit of information for us to take on board.

[Lockhouse]

I've bought property through my company and rented it out although not to myself.

If you rent it to yourself and pay full market rent it's not a problem. Otherwise you pay BIK on any benefit. If you live in it rent free other rules come into play (and are not in your favour).

If you carry on contracting you won't get reclassified as an investment company although that may change if you stop and only have property income (depends on how much property and what you do with it).

Any profit you make on a future sale is subject to corporation tax. After tax is paid however since the CGT rules changed it's actually cheaper to extract the money all the way out of the company than it was as property carries no taper relief.

With hindsight I wish that I'd taken the cash out of the company at the time and bought more property personally but I did OK as I bought 8 years ago. I wouldn't do it again unless I felt there were big capital gains to be made which won't happen anytime soon.