I currently run an IT contracting Ltd company.
I also own a holiday home that I let out.
As the holiday home is mortgaged and due to the Council tax, fuel and other expenses the letting 'business' actually doesn't realize a profit.
Would it be legal and feasible for my company to rent the house off me for the sum of the council tax, mortgage interest, 10% of house value wear and tear allowance plus any other costs so that there is no personal profit from this element, then for the company to retain the revenue from lettings?
This would have 2 advantages:
- as the letting is currently running at a loss it would reduce the corporation tax burden
- I would be able to reduce the dividend I take from the company, treating the money from the company for the house expenses as separate income but with no tax liability as the nett profit on this activity would be zero.
I also own a holiday home that I let out.
As the holiday home is mortgaged and due to the Council tax, fuel and other expenses the letting 'business' actually doesn't realize a profit.
Would it be legal and feasible for my company to rent the house off me for the sum of the council tax, mortgage interest, 10% of house value wear and tear allowance plus any other costs so that there is no personal profit from this element, then for the company to retain the revenue from lettings?
This would have 2 advantages:
- as the letting is currently running at a loss it would reduce the corporation tax burden
- I would be able to reduce the dividend I take from the company, treating the money from the company for the house expenses as separate income but with no tax liability as the nett profit on this activity would be zero.
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