Reply to: Buying residential property under Limited Company

[KEH]

Students are taxed the same as normal people...

There are schemes that can be used while studying, but that's getting a little off topic.

[TheFaQQer]

Individuals are taxed on income generated not studying status

<pedant>Actually, they are taxed on income received, not generated.</pedant>

[blinko]

Individuals are taxed on income generated not studying status

I know it's a fair way off, but I do want my kids to go to University, and intend they work for one of my companies during that time, earning an income.......while classified as students, and taxed as such! Again, I'll be talking this over with my tax guy....

[Sockpuppet]

I know it's a fair way off, but I do want my kids to go to University, and intend they work for one of my companies during that time, earning an income.......while classified as students, and taxed as such!

Students are taxed the same as normal people...

[KEH]

Please, go and see an accountant and get some tailored advice. A free forum isn't for advice on long term and financially critical plans like this.

I have a client who is in your position +10 years. Portfolio of rental properties in H&W limited company, would like to transfer to children, but the tax implications get him every which way.

Anyway, for starters, not sure where 26% comes from, and investigate the potentially not inconsiderable tax liabilities around the children becoming shareholders (or otherwise taking an inome) at 18.

Many thanks Jessica, I have a meeting scheduled in 2 weeks with my tax accountant and my IFA, I came on here spit-balling, on the off chance someone else had been in a similar situation, and could advise, so I don't just end being the pretty little thing in the corner, and can actually add value to the argument between them! Otherwise I'll just make the drinks!

I know it's a fair way off, but I do want my kids to go to University, and intend they work for one of my companies during that time, earning an income.......while classified as students, and taxed as such! Again, I'll be talking this over with my tax guy....nearer the time, who knows maybe some sporting prowess just skipped a generation or two, and they'll be keeping me in my old age!

[Sockpuppet]

I knew a guy who did that. Dead at 37, ex-wife got the lot.

In the drawing room with the candle stick?

[Jessica@WhiteFieldTax]

I do not intend to sell these properties, and at 18, my children will become directors of the company and will be provided with an income, all things being equal, I have no intention of withdrawing money from this company myself. For the next 9 years, tax should therefore be 26% not 40%. Comment re repaying loan from me, was a worst case scenario.

Please, go and see an accountant and get some tailored advice. A free forum isn't for advice on long term and financially critical plans like this.

I have a client who is in your position +10 years. Portfolio of rental properties in H&W limited company, would like to transfer to children, but the tax implications get him every which way.

Anyway, for starters, not sure where 26% comes from, and investigate the potentially not inconsiderable tax liabilities around the children becoming shareholders (or otherwise taking an inome) at 18.

[KEH]

You are ZGUY27 and you didn't like the answers you got in the first thread you opened I guess....
http://forums.contractoruk.com/accou...-property.html

Either that or learn to use the search. This was asked only a few days ago...

Thanks for the advice, but:
Nope, not ZGUY27
Not looking to take money out of an LTD to fund personal purchase, I'm looking to set up LTD to manage income from rental pool.
Funnily enough, said search function was how I found this thread, and subsequently posted.

I do not intend to sell these properties, and at 18, my children will become directors of the company and will be provided with an income, all things being equal, I have no intention of withdrawing money from this company myself. For the next 9 years, tax should therefore be 26% not 40%. Comment re repaying loan from me, was a worst case scenario.

[stek]

I am looking at setting up a second LTD, purely as an investment engine, the sole purpose of the LTD will be the purchase of BTL properties. My intention is to make a substantial loan to the company, use those funds to purchase a small number of properties (residential and commercial), which will then be renovated and rented. I do not intend to take out a mortgage, and will be buying for cash.
CGT is not a current concern as I do not intend to liquidate. As I also have no intention of drawing salary or dividends from the ltd, I should pay only 26% tax rather than full whack if I were to own the properties myself.
Profit (rental income) will be used for repairs, and further investment.
Once a sufficient warchest has been built up, I could of course begin repaying the initial loan made to the company.......

Or am I being naïve?

I knew a guy who did that. Dead at 37, ex-wife got the lot.

[northernladuk]

I am looking at setting up a second LTD, purely as an investment engine, the sole purpose of the LTD will be the purchase of BTL properties. My intention is to make a substantial loan to the company, use those funds to purchase a small number of properties (residential and commercial), which will then be renovated and rented. I do not intend to take out a mortgage, and will be buying for cash.
CGT is not a current concern as I do not intend to liquidate. As I also have no intention of drawing salary or dividends from the ltd, I should pay only 26% tax rather than full whack if I were to own the properties myself.
Profit (rental income) will be used for repairs, and further investment.
Once a sufficient warchest has been built up, I could of course begin repaying the initial loan made to the company.......

Or am I being naïve?

You are ZGUY27 and you didn't like the answers you got in the first thread you opened I guess....
http://forums.contractoruk.com/accou...-property.html

Either that or learn to use the search. This was asked only a few days ago...

[Jessica@WhiteFieldTax]

Crunch your numbers on long term CGT when you do sell, even if its not till post retirement.

Generally the maths works out in favour of personal CGT rates, rather than the potential double tax charge of CT on gains in the company plus personal; CGT on extracting from the company at closure.

[KEH]

Along the same lines

I am looking at setting up a second LTD, purely as an investment engine, the sole purpose of the LTD will be the purchase of BTL properties. My intention is to make a substantial loan to the company, use those funds to purchase a small number of properties (residential and commercial), which will then be renovated and rented. I do not intend to take out a mortgage, and will be buying for cash.
CGT is not a current concern as I do not intend to liquidate. As I also have no intention of drawing salary or dividends from the ltd, I should pay only 26% tax rather than full whack if I were to own the properties myself.
Profit (rental income) will be used for repairs, and further investment.
Once a sufficient warchest has been built up, I could of course begin repaying the initial loan made to the company.......

Or am I being naïve?

[Jessica@WhiteFieldTax]

And mileage every month to drive down and inspect it...

My understanding*1 is that due to health and safety and obligations on landlords, a weekly inspection is advised, nea necessary.

*1 - or so my clients tell me..

[northernladuk]

I rent my flat out in London and whilst it may put you into the top tax bracket the actual tax you will pay on this can be very little
For starters, management fees, insurance, mortgage interest, repairs are all tax deductible along with other things.

EG: £1000 per month rent is £12000 a year
depending on your interest rate I would imagine at least half of that figure if not more is mortgage interest which is deductable
£6000 a year then
£300 insurance
If you are paying a management fee then this is tax deductable lets say 10% of rent £1200 a year
Repairs, lets say £500 a year which is probably on the low side

So £4000 to pay tax on even at 40% is £1600 tax on the guessed figures here

Keep it personal

And mileage every month to drive down and inspect it...

[pcgtron]

I have a scenario:
I wish to sell my house but cannot (house market/ asking too much for it), I’m therefore thinking about renting it out but I’m told that any income from the renting out needs to be put on yourself assessment and thus pushes you into the higher tax bracket.
In addition I have an amount in my business bank account, as I take only up to the higher tax threshold each year, that enables me to purchase the house outright (roughly 150k).
With that, I’m thinking about selling my house to my business in full and renting the house out via the business. I have several concerns about this:
• Can I use the same business as my consultancy business?
• Are there any limitations or a persona using his own business?
• In the future, I’m talking retirement time, when I come to sell the house (via the business), the cash would then hold the sum of the monies gained from the sale, I could essentially draw down the amount and close the business (what are the tax implications) Or I could just carry on drawing a wage until the amount has gone?
Cheers

I rent my flat out in London and whilst it may put you into the top tax bracket the actual tax you will pay on this can be very little
For starters, management fees, insurance, mortgage interest, repairs are all tax deductible along with other things.

EG: £1000 per month rent is £12000 a year
depending on your interest rate I would imagine at least half of that figure if not more is mortgage interest which is deductable
£6000 a year then
£300 insurance
If you are paying a management fee then this is tax deductable lets say 10% of rent £1200 a year
Repairs, lets say £500 a year which is probably on the low side

So £4000 to pay tax on even at 40% is £1600 tax on the guessed figures here

Keep it personal