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BTL business. Starting capital.

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    #31
    Originally posted by eek View Post
    Once again you seem to not be reading all the posts - just the ones that match your incorrect assumptions...
    I read the thread again. I also shared my experience which is that I made a director Lon to the Ltd. That was used to buy property

    When I looked at moving personal property (highly related) cgt made it prohibitively expensive

    Comment


      #32
      Just to make sure we are taking about the same things.
      CGT is payable by a person after £12k allowance.
      Ltd does not care about CGT.

      So if one sells a property to LTD with 12k increase (or 24k for shared ownership) cgt is out of the equation.

      In this case I can only see stamp duty being paid by the LTD.
      And any future corporate tax on the difference of property value if sell up.

      Comment


        #33
        Originally posted by anim View Post
        Part of the chain missing here I think.

        I put 100k in the LTD as capital (via shares, right) then the LTD will buy a property for 100k. When LTD sell up for 150k, LTD wil have to pay corp tax of 19% on the 50k profit. What CGT here?

        Then the LTD will have ~140k as fund. If I want to take this 140k out, wont I need to pay at least 7.5% divi tax on the whole amount of 140k?

        In contrast: If I lend the 100k, when LTD has 140k, it can pay me back 100k and I pay at least 7.5k in divi tax on 40k.

        Am I missing something?
        you're missing quite a bit (a lot)

        You already have a permie job so 7.5% divi tax is not an option.
        You only pay CGT on the gain. Why would you opt to pay divi tax on a capital gain?

        Making a loan rather than injecting capital is fine. And you can even make profit on the loan with interest. But then you lose the ability to offset the capital growth as when you finally sell up as all the company money will be a capital gain, not just the growth in value.

        GET AN ACCOUNTANT.
        See You Next Tuesday

        Comment


          #34
          Originally posted by Lance View Post
          you're missing quite a bit (a lot)

          You already have a permie job so 7.5% divi tax is not an option.
          You only pay CGT on the gain. Why would you opt to pay divi tax on a capital gain?

          Making a loan rather than injecting capital is fine. And you can even make profit on the loan with interest. But then you lose the ability to offset the capital growth as when you finally sell up as all the company money will be a capital gain, not just the growth in value.

          GET AN ACCOUNTANT.
          Who pays CGT. LTD?
          Are you saying the loan itself will be capital gain for the LTD?

          Comment


            #35
            Originally posted by anim View Post
            Who pays CGT. LTD?
            Are you saying the loan itself will be capital gain for the LTD?
            Get an accountant
            'CUK forum personality of 2011 - Winner - Yes really!!!!

            Comment


              #36
              I've done all of this and more. But more importantly I have researched a lot into the mechanics, and learned that there is much not worth doing.

              I have a good IT and property accountant who can help you with this. PM me if you want his details.

              It would take me too long to tell you what to do and of course I don't know your specific situation, but briefly you could:-

              1. Close your IT company and claim ER - assuming you don't need it any more. You then have personal funds available to invest.
              2. Set up a SPV and loan the personal funds into it.
              3. Transfer your property into the SPV, using the loaned funds to buy. This will be a sale/purchase transaction and you will pay CGT (if applicable & payable within 30 days) and SDLT.
              4. If you need a mortgage then apply ASAP. Be prepared for a long wait and a lot of hassle from the limited numbers of Ltd Co mortgage lenders, and be prepared for interest rates that are double those of personal BTL mortgages and the extortionate fees for them.
              5. So now you have the properties in the SPV and all rental income goes into the SPV. The first thing you can do is extract all funds that you loaned into the company - of course this is tax free because you already paid ER CGT on it. This extraction could take several years.
              6. After all loaned funds have been extracted, all further rental income remains in the SPV and can be taken out or re-invested, after CT is paid.

              This is just one example of what you can do. I do agree with the other posters here that you need to get a real grip on this though.

              Did I do the above? No. But I know exactly how to do it and more importantly I know exactly why I didn't do it. It was easier to swallow S24 tax in the end, and give up the notion of ever working in a 'job' ever - so the real loser is the government because they taxed my job/business out of existence.

              Comment


                #37
                Originally posted by ChimpMaster View Post
                I've done all of this and more. But more importantly I have researched a lot into the mechanics, and learned that there is much not worth doing.

                I have a good IT and property accountant who can help you with this. PM me if you want his details.

                It would take me too long to tell you what to do and of course I don't know your specific situation, but briefly you could:-

                1. Close your IT company and claim ER - assuming you don't need it any more. You then have personal funds available to invest.
                2. Set up a SPV and loan the personal funds into it.
                3. Transfer your property into the SPV, using the loaned funds to buy. This will be a sale/purchase transaction and you will pay CGT (if applicable & payable within 30 days) and SDLT.
                4. If you need a mortgage then apply ASAP. Be prepared for a long wait and a lot of hassle from the limited numbers of Ltd Co mortgage lenders, and be prepared for interest rates that are double those of personal BTL mortgages and the extortionate fees for them.
                5. So now you have the properties in the SPV and all rental income goes into the SPV. The first thing you can do is extract all funds that you loaned into the company - of course this is tax free because you already paid ER CGT on it. This extraction could take several years.
                6. After all loaned funds have been extracted, all further rental income remains in the SPV and can be taken out or re-invested, after CT is paid.

                This is just one example of what you can do. I do agree with the other posters here that you need to get a real grip on this though.

                Did I do the above? No. But I know exactly how to do it and more importantly I know exactly why I didn't do it. It was easier to swallow S24 tax in the end, and give up the notion of ever working in a 'job' ever - so the real loser is the government because they taxed my job/business out of existence.
                So what's your most tax efficient, efficient wealth growth approach ?
                Last edited by GitMaster69; 21 September 2020, 10:58.

                Comment


                  #38
                  Originally posted by GitMaster69 View Post
                  So what's your most tax efficient, efficient wealth growth approach ?

                  Probably getting a good accountant.
                  …Maybe we ain’t that young anymore

                  Comment


                    #39
                    Originally posted by WTFH View Post
                    Probably getting a good accountant.
                    we all have them accountants , they don't give answers to questions we don't know. He's saying he has extensive experience and know how so I'm asking to share?

                    Comment


                      #40
                      Originally posted by GitMaster69 View Post
                      So what's your most tax efficient, efficient wealth growth approach ?
                      Probably by not investing in an over priced asset which the Government has taxed highly and could potentially focus on again (as there isn't many other areas where money can be raised at the moment).

                      It really wouldn't surprise me if tax relief on loans was removed from residential housing..
                      merely at clientco for the entertainment

                      Comment

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