Reply to: Buying a house with a large deposit

[Bellona]

No one is this stupid. Sockie.

+ 1

[northernladuk]

Unfortunately, i don't have any family who has that kind of cash. Anyway, I bought the house with my dividend this April or after my post. Now, my client has extended my contact for another great year. I just purchase another one. I haven't paid the deposit yet but will probably do the director loan or wait until the new tax year.

Eh? Not trolling at it's finest this.

I don't understand. Yes, i am a new contractor; however, i get paid really well. According to HMRC, if you pay pack the Director Loan before the accounting end period, you don't have to pay any taxes which is pretty good. I do understand if my contract is not extended, i am then screwed; however, my family is able to pay back the company loan anytime. It's not a problem. I will not lose the house....however, i will get additional profit since i can rent it out.

[chriseverclear]

Buying a house with a large deposit

If you get paid really well, then save the money and use that as a deposit.

If you mean that your company invoices a high rate, then look at the legal ways of extracting money from the business.

If your family can pay back the loan for you, why don't you just borrow from them in the short term and use that as a deposit?

Unfortunately, i don't have any family who has that kind of cash. Anyway, I bought the house with my dividend this April or after my post. Now, my client has extended my contact for another great year. I just purchase another one. I haven't paid the deposit yet but will probably do the director loan or wait until the new tax year.

[TheFaQQer]

I don't understand. Yes, i am a new contractor; however, i get paid really well. According to HMRC, if you pay pack the Director Loan before the accounting end period, you don't have to pay any taxes which is pretty good. I do understand if my contract is not extended, i am then screwed; however, my family is able to pay back the company loan anytime. It's not a problem. I will not lose the house....however, i will get additional profit since i can rent it out.

If you get paid really well, then save the money and use that as a deposit.

If you mean that your company invoices a high rate, then look at the legal ways of extracting money from the business.

If your family can pay back the loan for you, why don't you just borrow from them in the short term and use that as a deposit?

[NickNick]

I wish I could find a contract that paid enough in 2 months to buy a house.

depends on teh rate of course, but I'm sure there are places out there for less than the million quid a month you bring in. :O)

[d000hg]

After 2 months of work, i am able to put a very large deposit on a house. Contracting is a new way to live... :-)

I doubt it's very large.

[northernladuk]

I don't understand. Yes, i am a new contractor; however, i get paid really well. According to HMRC, if you pay pack the Director Loan before the accounting end period, you don't have to pay any taxes which is pretty good. I do understand if my contract is not extended, i am then screwed; however, my family is able to pay back the company loan anytime. It's not a problem. I will not lose the house....however, i will get additional profit since i can rent it out.

You have to have money in the business to lend it to yourself. You won't earn enough in 2 months to reach the divi limit never mind enough for a loan.

How will you not lose the house when your loan is paid back to the company but you have no income to afford the mortgage for 6 months plus?

No one is this stupid. Sockie.

[northernladuk]

After 2 months of work, i am able to put a very large deposit on a house. Contracting is a new way to live... :-)

You are a sockie or you are deluded or you are failing at running a business. One of those three.

[chriseverclear]

I wish I could find a contract that paid enough in 2 months to buy a house.

After 2 months of work, i am able to put a very large deposit on a house. Contracting is a new way to live... :-)

[chriseverclear]

I wouldn't... You will be wasting your time.....

And on top of that being a new contractor you will have nothing to loan so wouldn't bother again. Pushing the edge without a warchest or any contract experience under your belt is suicide IMO. You loan yourself the money, can't get another contract, can't pay it back, can't pay your VAT, spent CT money, lose house.... You get the picture....

I don't understand. Yes, i am a new contractor; however, i get paid really well. According to HMRC, if you pay pack the Director Loan before the accounting end period, you don't have to pay any taxes which is pretty good. I do understand if my contract is not extended, i am then screwed; however, my family is able to pay back the company loan anytime. It's not a problem. I will not lose the house....however, i will get additional profit since i can rent it out.

[d000hg]

I wish I could find a contract that paid enough in 2 months to buy a house.

[Kanye]

Yes, I was wondering as well!

I bought the flat for cash so I'm hoping I can have a few cheap years now & keep living expenses < 40k.

Even if that doesn't happen (which is more than a small chance!), I can spread the pain over 2-3 years instead of 1 that would have touched into 50% tax.

Even if I take the lot as a divi on April 2nd, tax won't be payable till January 2015 because of how the dates fall.

My wife also stopped working giving me more potential for income splitting than I have had previously.

With the 25% payment thing for directors loans I might weight it more to this first year to be done with it.

I would advise this path to other contractors where it fits their lifestyle. Save up, buy a dump for cash using this method of extracting capital, and then your ability to save and reduce the figure you *need* to take from your LTD is boosted when you aren't paying £1000+ in rent or mortgage. If you can have a few cheap years it can be a really tax efficient.

My only problem is by the time I have cleared the tax overhead I will have a huge amount accrued in the company if I keep invoicing. This is a arguably a good problem to have though!

[northernladuk]

Thank you! I will do a bit more research on the Directory Loan.

I wouldn't... You will be wasting your time.....

And on top of that being a new contractor you will have nothing to loan so wouldn't bother again. Pushing the edge without a warchest or any contract experience under your belt is suicide IMO. You loan yourself the money, can't get another contract, can't pay it back, can't pay your VAT, spent CT money, lose house.... You get the picture....

[chriseverclear]

Director Loan

What do you live off those two years then if you don't mind me asking? Or is it only part of your yearly dividends in each year? And the 25% tax thingy when it is still open after year end is covered?

Thank you! I will do a bit more research on the Directory Loan.

[chriseverclear]

Thank for the advice. I will do a bit more research.