First property on LTD

**OwlHoot** · 18 January 2016, 11:21

Possibly (not sure), but you might then be lumbered with paying council tax at the business rate, which is horrendous (ten or more times the domestic rate).

**northernladuk** · 18 January 2016, 11:37

Originally posted by diseasex View Post

If i bought property on my limited and it would be LTD's first property I wouldn't pay 2% additional tax after april? Anyone understands this?

Well you are buying it to let it and it still has a landlord, it will just be the LTD not you so you would think it will still apply whatever vehicle you use to purchase it.

That said not sure how much you've looked in to buying a property through the company as it's generally considered to be a worse option than buying it yourself and I am sure 2% isn't going to be enough to change this. I think you've a lot more to worry about when purchasing through the LTD than the 2% hike.

**diseasex** · 18 January 2016, 11:38

Originally posted by northernladuk View Post

Well you are buying it to let it and it still has a landlord, it will just be the LTD not you so you would think it will still apply whatever vehicle you use to purchase it.

That said not sure how much you've looked in to buying a property through the company as it's generally considered to be a worse option than buying it yourself and I am sure 2% isn't going to be enough to change this. I think you've a lot more to worry about when purchasing through the LTD than the 2% hike.

I'll definately look at it closer when ill find the property. Now im just thinking aloud and maybe looking for some loopholes

**northernladuk** · 18 January 2016, 11:41

Originally posted by diseasex View Post

I'll definately look at it closer when ill find the property. Now im just thinking aloud and maybe looking for some loopholes

To be honest if there were loopholes we'd be all over it like a rash already.

Load of threads on property thought the company here but I am not sure many will go in to any detail. More likely pointed out it's inefficient to go through LTD and they die. Might be something in there to follow up though...

https://www.google.co.uk/search?q=pr...qXG4vvULOcgLgL

**diseasex** · 18 January 2016, 11:41

Originally posted by northernladuk View Post

To be honest if there were loopholes we'd be all over it like a rash already.

Load of threads on property thought the company here but I am not sure many will go in to any detail. More likely pointed out it's inefficient to go through LTD and they die. Might be something in there to follow up though...

https://www.google.co.uk/search?q=pr...qXG4vvULOcgLgL

I know about these threads, but thanks

**ChimpMaster** · 18 January 2016, 11:54

This is a good question and TBH I don't know the answer just yet. As a separate legal entity, you would think that the Ltd Co is distinct from you personally, so that if you already own property personally then the first one in the Ltd Co would not be subject to the additional 3% stamp duty (not 2%!).

There has been a fundamental shift in the taxation of rental income due to Osborne’s very poor decision making based on a 22 year old’s economic report. This will lead to tax being liable on gross income [rather than profit] and in some cases even on losses in rental businesses, due to the removal of higher rate mortgage interest relief on BTL investments. The proposed implementation is deeply flawed and hence has given rise to a challenge by way of a Judicial Review.

Anyway, the point I will make here is that there are now real business reasons to run BTLs through a Limited Company, because you will be able to offset loan costs against income, leading to fair and correct taxation [on profits]. Alternatives are to own the property personally and use a deed of trust to run the rental income through a Ltd Co that manages the properties for you. These are all options that will suit those with higher debt ratio on their portfolios, many of whom are the new no-money-down-get-rich-quick types and probably shouldn’t be risking so much in the first place; personally I’m not a fan of them and I think most will suffer because they don’t never really ‘own’ much of their ‘business’.

For those who work hard and invest over the long term, pay off their BTL mortgages and build equity rather than debt, then you won’t be hit so much by the mortgage interest tax changes. Still a sting because you’re paying more tax for no reason, but little you can do about it. The 3% stamp duty is painful but again, unless you’re buying more than 6 properties in one go there isn’t anything you can do about it except negotiate the price down or include the 3% as part of your trading costs.

**WTFH** · 18 January 2016, 12:35

Do you need one with a parking space for your company M5?

**Iliketax** · 18 January 2016, 12:43

Originally posted by diseasex View Post

If i bought property on my limited and it would be LTD's first property I wouldn't pay 2% additional tax after april? Anyone understands this?

The consultation documents suggests that the 3% extra SDLT would be paid by a company.

**jamesbrown** · 18 January 2016, 13:04

Originally posted by Iliketax View Post

The consultation documents suggests that the 3% extra SDLT would be paid by a company.

Yes, you need to read the consultation. IIRC, this scenario, along with many others, is addressed explicitly and YourCo would pay 3% on the first property. There are obvious loopholes and the consultation seems to be pretty good at addressing these.

First property on LTD