My Ltd Company buying a house and me renting it?

[Tramline]

Ask an accountant. This is too big a decision to base on free advice from non-experts.

Your company would have to pay CGT when the house was sold for starters.

Couldn't agree more. The advice on this site regarding taxation matters is questionable at the best of times. Go and invest some money in some professional advice.

[boredsenseless]

Hey Folks,

I have some cash saved up in my LTD company that would make a good deposit for a house, so I was wondering about the company buying a house, and then me renting it off them - is there anyway that i could work this out so that it becomes tax efficent - like make the house rental income a loss, and pay for the loss out of company thus minimising my tax?

has anyone tried this - does it sound like a good idea or should i go back to work and stop day dreaming?

thanks

muhnkee_2

You will also have the issue that if you haven't got many years of auditted accounts and sizable assest in the business the bank will probably require a personal guarantee before agreeing to loan.

And we all know that you stay away from personal guarantees like the plague

[XLMonkey]

Why is it not also a taxable benefit in kind if you own the house personally, but don't pay yourself a fair market rent?

Because you've already paid tax on the house you own personally, whereas you haven't if it's bought by the company

[ChimpMaster]

Why not wait until you can buy a smaller house freehold (or with minimal commercial mortgage). You could then rent out that house on the market (or to DSS) and pump that income back into the company. Yes this doesn't exactly provide you personally with any immediate income but it lets you invest your money rather than let it sit in a 3% business interest account! In the longer term future you could use this as retirement income.

I would enquire into the appropriate insurances etc as mentioned by another poster here, to ensure that you don't lose the house.

You might find that that you need to lend money from your Ltd Co to another Ltd Co (owned also by you, for the purpose of residential/property lettings) so that the 2 entities are kept separate for business purposes.

[ASB]

There are some very specific rules about this and the BIK attributable to the occupants. You can find all about it on the IR webtulipe.

If you still think it is a good idea then you need to consider whether you want your company to own the house. There are a number of reasons why it may not be. Some of them are lack of CGT relief. Plus you might become an investment company for tax purposes. Also there are issues should you emigrate.

There are advantages as well. Try the property board on the motley fool it will probably have been covered a number of times.

One common method, which I peorsonally have never used, is to buy the house personally then engage your company as the managing agents. By some amazing quirk of fate the costs tend to make the overall transaction from the personal pov tax neutral. The company makes a bit of profit on the deal which gets charged at it's CT rate.

Edit: you can buy a guide "using a property company to save tax". It's downlaodable from somewhere like taxcafe. Costs money of course, but then useful advice often does. :-)

[boredsenseless]

There is also I expect benefit in kind if you don't pay a fair market rent - so in the end I would expect this to be the most expensive type of house purchase.

If your company goes belly up - you lose the house

Commercial mortgages are also

a) More costly (higher interest rates)

b) Require much higher deposits (around 30%) so you may not have the sizeable chunk you think you have for a company deposit if you've been basing your figures round the personal house buying world

[expat]

There is also I expect benefit in kind if you don't pay a fair market rent - so in the end I would expect this to be the most expensive type of house purchase.

Why is it not also a taxable benefit in kind if you own the house personally, but don't pay yourself a fair market rent?

[privateeye]

There is also I expect benefit in kind if you don't pay a fair market rent - so in the end I would expect this to be the most expensive type of house purchase.

If your company goes belly up - you lose the house

[Lucifer Box]

Ask an accountant. This is too big a decision to base on free advice from non-experts.

Your company would have to pay CGT when the house was sold for starters.

[muhnkee_2]

Hey Folks,

I have some cash saved up in my LTD company that would make a good deposit for a house, so I was wondering about the company buying a house, and then me renting it off them - is there anyway that i could work this out so that it becomes tax efficent - like make the house rental income a loss, and pay for the loss out of company thus minimising my tax?

has anyone tried this - does it sound like a good idea or should i go back to work and stop day dreaming?

thanks

muhnkee_2