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Where Taxpayers and Advisers Meet

Buying and Selling a Property in my LTD Co. name?

seabro
Posts:4
Joined:Thu Oct 30, 2008 12:47 pm
Buying and Selling a Property in my LTD Co. name?

Postby seabro » Tue May 02, 2017 9:39 pm

Hi,

I have been offered a very keenly priced property that I would like to buy, then sell on. (I'll probably do some light touch up work). Whilst I don't have the cash personally at the moment, I have the money sitting in my company account.

If I bought it in the company name, would I have to charge VAT when I sold it? If so, thats a non-starter. (I am on the small business flat rate scheme).

Alternatively, can I borrow the money to buy it, then repay the loan when I sell it?

Rookie questions but it's a great deal and I'd hate to pass up on it.

Thanks,
seabro

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Buying and Selling a Property in my LTD Co. name?

Postby SteLacca » Thu May 04, 2017 12:49 pm

Commercial property or residential?

seabro
Posts:4
Joined:Thu Oct 30, 2008 12:47 pm

Re: Buying and Selling a Property in my LTD Co. name?

Postby seabro » Thu May 04, 2017 1:23 pm

SteLacca, thanks for responding. It's a residential property.

SteLacca
Posts:448
Joined:Fri Aug 07, 2015 2:17 pm

Re: Buying and Selling a Property in my LTD Co. name?

Postby SteLacca » Wed May 10, 2017 1:20 pm

If you don't opt to tax then you won't have to charge VAT on sale. Corporation tax will be payable on the profit from sale, though, and then you will have personal tax to pay when you withdraw the profits from the company (either salary or dividend).

The alternative of borrowing from the company is also possible, though if you don't repay with a commercial rate of interest you will be liable to tax on the benefit in kind. The company would, of course, be liable to corporation tax on the interest received. The company will also pay S.455 tax at 32.5% whilst the loan remains outstanding (this is repayable to the company as the loan is repaid)

Which option is best would require crunching the numbers in accordance with the specific circumstances. Do you have an accountant? They could probably do the comparison for you.


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