Property Investment through Ltd

**Tool** · 5 April 2007, 10:02

Originally posted by weboo

Has anyone done or currently doing this? Went to the A Place in the sun exhibition at the weekend and am looking for a BTL either in the UK or abroad. Now, thinking about the money situation..I live on a minimal wage each month and save up tons in my company bank account which I grab when I need. So I might aswell use the ltd to fund stuff right??(if I can)

Some pimps(sun tanned estate agents same as recruitment agents) on the stands talked about using a ltd company to invest through rather than personal income when buying an investment property...not applicable for inheritance tax etc and if you sell & make a profit - first 10k is tax free

Is this right? I will of course speak to my accountant about this, but wondered if anyone is already doing it.

The first 10k story was true before, but this is no more the case now.

Using a ltd is interesting if you buy (maybe develop) and then resell quickly. The proceeds of this activity will then be considered as earnings, which attracts NIC. Making a profit when reselling the property is then not considered as capital gain but income.

On the other hand, if you buy properties to invest (ie. rent then back for long time and then resell for a profit), your proceeds are not considered as earnings. They do not attract NIC, the rents are taxed as income (but you deduce the amount of the mortgage interest), and when you resell for a profit, you pay CGT.

The main problem when using a ltd is to get a mortgage. You will probably get something like 70% LTV at a high interest rate, while if you do it as an individual, you can get 85%-90% with reasonable interest rates...

HTH

**weboo** · 5 April 2007, 10:19

Interesting...thanks for the reply, I will discuss with the accountant.

**lukemg** · 5 April 2007, 10:35

www.housepricecrash.co.uk - for a really balanced view of the market - not

**tim123** · 5 April 2007, 10:51

Originally posted by Tool

The first 10k story was true before, but this is no more the case now.

Actually it never was true.

The 10K income was tax free if there was *only* 10K. If there was more than this, the tax saving on the first 10K was clawed back from the next 40K. Someone earning 50K from a company saw no benefit at all from the 10K tax free band.

tim

**Limited** · 5 April 2007, 11:03

Originally posted by lukemg

www.housepricecrash.co.uk - for a really balanced view of the market - not

Probably a more balanced that you'll get at the Place in the Sun exhibition

House prices are falling in France, Spain, USA. I bet they didn't tell you that

**Lockhouse** · 5 April 2007, 11:55

I've got a property through my Ltd.

There are just as many "cons" as there are "pros". Your mortgage will be more expensive, you don't have as much flexibility as if you owned it personally, you are at the mercy of changes in corporate legislation, you will always have conversion to cash issues (tax or otherwise) when you sell. There are different issues for inheritance, law, buying abroad etc etc. It's not as simple as you have been led to believe. Watch out.

**Darren@UptonAccountants** · 5 April 2007, 12:08

Property

One of the other options is to have the ownership of the property offshore, especially if you're in a high capital growth area. The offshore company pays no CGT, you only pay tax on the funds brought back to the UK by way of dividends and as a result can spread the tax liability or keep it below the higher rate depending on circumstances.

**Lockhouse** · 5 April 2007, 12:12

Originally posted by Darren@1stAccountancyServ

One of the other options is to have the ownership of the property offshore, especially if you're in a high capital growth area. The offshore company pays no CGT, you only pay tax on the funds brought back to the UK by way of dividends and as a result can spread the tax liability or keep it below the higher rate depending on circumstances.

Fair enough, but surely he has to have the cash in the company offshore in the first place? How would he move the cash from his UK company?

**Darren@UptonAccountants** · 5 April 2007, 12:14

Offshore

Very true, why not make the offshore company a shareholder.....create another level of shares within the company (e.g. Ordinary B Shares) and extract the funds by sending dividends to the offshore company.

Property Investment through Ltd