Buy to let with a lease hold property

[kembljoe]

Hi,

I am considering to buy a property nowadays by paying £70000. This will be a leasehold for 20 years and I will immediately let this property and start earning rental income. 20 years later, this property will be given back as my lease will have finished in 20 years.

In my personal bank account, there is not enough money to buy this property and I have already taken out all my dividend allowance from my company account for this year.

I am considering to buy this property through my company, but I am not sure whether this is a feasible option or not, as I don't know how much tax will be paid while buying the property, while earning rental income, etc.

Again, as I said above, due to having the property for just 20 years, I will not be selling it in the future, will just be renting it, therefore there will be no CGT paid in the future.

Will "buying this property from the company" is a more feasible option than transferring the money from my company account to my personal account and then buying from my personal bank account?

Could you please enlighten me by mentioning about all the tax types/calculations related with a "limited company buying a property for BTL reasons"?

Thanks.

[Sockpuppet]

This has been covered a few times if you search

[kembljoe]

This has been covered a few times if you search

This is related with lease hold. Generally, the discussions in this forum are about buying, repairing, and then selling the property, whereas in my case I won't be selling it as it is lease hold.

[ChimpMaster]

Seems like a poor business decision to me, and a poor investment.

You don't say whether £70k is the total price or just your initial equity input, but either way you're not going to make any money on this deal. Not unless you're achieving a very good rental income, which might be the case if you're looking at a commercial let.

If you're going to take on BTLs and all the effort this entails, then you should be looking to build a portfolio, not look to hand the property back after 20 years. That's what I would do anyway, but I don't know the ins and outs of your opportunity so I won't comment any further!

As for buying through your company: this is possible but it might be better to set up another Ltd Co which deals only in property investment, and then loan the money from your IT Ltd to the Property Ltd. The Property Ltd will pay interest on that loan to your IT Ltd, which is then treated as taxable profit. All in the family still.

Look out for affiliated company restrictions though.

[BA to the Stars]

You will be lucky if any lender would touch a lease of 20 years. It represents very poor security value to them. Normally they look at leaseholds of at least 50 years.

[yasockie]

I don't think that numbers can add up on such an arrangement, have you considered renovation costs, downtime between rentals and the fact that all income from this will add to your existing income and therefore will be taxed, possibly even at a higher rate?

[fullyautomatix]

I don't think that numbers can add up on such an arrangement, have you considered renovation costs, downtime between rentals and the fact that all income from this will add to your existing income and therefore will be taxed, possibly even at a higher rate?

Good points. I would add cannabis farms, twenty dogs living on top of each other, drug dealers, murders, neighbours complaining, late night raves, rent not paid for months etc etc etc.