Advice please. Buying property 50% ltd / 50% private

[geoff from contracta IOM]

One potential option may be to use an LLP with the company as 50% and you as 50% . This should allow you to extract the profit from the Ltd. to invest in the partnership without you being taxed as an individual to extract it.
The LLP would borrow on commercial terms usually more expensive than a personal BTL mortgage ( you would probably still need to provide a personal guarantee so you are paying more and still have the liability ) and any profits would be passed from the LLP on a tranparent basis meaning you would add them to your income and the company would receive it's share and pay corp tax on it the same as the rest of its profits THEN you would have to extract that profit from the Ltd. and pay income tax on it.
The gist of what i'm saying is that in order to take the 60K out "tax free" now you will forever pay corp tax and THEN income tax on any profits from the Ltd as well as on your own share of the LLP's profits, costly for what you obviously hope will be an appreciating asset ( the company also has no Cap gains allowance but you do ) I doubt extracting only 60K would make this viable unless you are planning to become non-resident at some time in the future then it might benefit you.
All in all I wouldn't reccomend it !

[Waldorf]

I wouldn't mix the ownership up, I agree that it sounds messy and I cannot see a reason for doing it.

I cannot see a problem with owning the property 100% through your company or 100% in your name, but not a mixture.

[MarillionFan]

In almost all cases(unless you are setting up an investment company) you would be better to take a BTL out in your own personal name.

So how to get your 60k out?

Well numerous ways, but you're going to have to pay some Corp tax on your company profits regardless. Make sure you use up to your div plus salary allowance. Remember you can also lend the money to yourself as a directors loan!

Now top up the amount you want with a BTL mortgage or dependent on the property use some low interest methods. For example a Virgin credit card can be used to take out a 12 month loan at just 4% interest and/or a zopa loan for £15k these can be less than a BTL mortgage rate. This way you can up your LTV if needs be. Remember all of the interest you incur is offset against your BTL earnings.

I've just used all of these exact methods to build up the funds to buy a btl property outright without having to jump hurdles with the bank on a btl. I've saved on up front arrangement fees and the interest is roughly the same. Some loans are shortterm but any contractor on a good run could save £20k per year to pay off the capital, and in my case I have transferred the income to buy partner to save tax.

Do it all personally IMO.

[Conor]

Housing Associations are designed to owned houses and their tax system supports them.

It does not support limited companies own houses its a lot more beneficial to own them as an individual.

Thank you, ill have a bit of a rethink i guess.

[eek]

Thanks eek, Its a shame i cannot get a proper BTL mortgage within my company. In what ways do you think it could be messy? I only came to the idea after noticing that housing associations are offering properties 50%, 75% shares in properties. In their model, some of the property is owned by the housing association and the rest by an individual. Im not sure how my model would differ.

Housing Associations are designed to owned houses and their tax system supports them.

It does not support limited companies own houses its a lot more beneficial to own them as an individual.

[Conor]

You don't want to as it would be a total mess.

What you need to do is to work out how to get that £60k out of the company and into your hands and then use it as the deposit on the property.

Whether that means taking the tax hit now or later depends on the size of the loan you get. But personally I would be looking at a 90k mortgage taking £30k or so out now and the rest next year.

I have a simple rule with business, keep things simple as the best laid plans will always have a flaw you can't see.

Thanks eek, Its a shame i cannot get a proper BTL mortgage within my company. In what ways do you think it could be messy? I only came to the idea after noticing that housing associations are offering properties 50%, 75% shares in properties. In their model, some of the property is owned by the housing association and the rest by an individual. Im not sure how my model would differ.

[Conor]

Moved to Business/Contracts.

Thank you Cojak

[eek]

You don't want to as it would be a total mess.

What you need to do is to work out how to get that £60k out of the company and into your hands and then use it as the deposit on the property.

Whether that means taking the tax hit now or later depends on the size of the loan you get. But personally I would be looking at a 90k mortgage taking £30k or so out now and the rest next year.

I have a simple rule with business, keep things simple as the best laid plans will always have a flaw you can't see.

[cojak]

Moved to Business/Contracts.

[Conor]

Hi moderators, is it possible to move this thread to the general part of the forums as it is pretty quiet in this part. I am a bit desperate for advice on this. Thanks in advance.

[Conor]

Hi all,

My Name is Conor and I run an I.T consultancy.

First may i say that this is a fantastic set of forums. I have searched but did not find an answer to what i am about to propose.

I am looking to buy a property for around £120k. In my companies account I can afford to pay 60k. I have searched and searched but cannot find a broker who will do a buy to let mortgage for a LTD company for the other 60k.

I had the idea of buying 50% of the property through my company, then getting a regular mortgage for the other 50%. The property will then be rented out as a long term let to someone I have already lined up.

The rental would cover the 50% mortgage and the remainder paid into my company.

My questions regarding this idea are:

1. Is this legally possible?
2. Would this be hard to achieve in regards to securing a 50% mortgage?

Any input on my predicament is very much welcome. I was really hoping to contain this purchase within the company but since nobody appears to be offering BTL mortgages for a ltd company I am at a cross roads.

Thanks in advance,

Conor