property management company

[Feedback]

not sure where to put this...

a client has a number of properties that they own personally and wishes to incorporate a company to manage the properties i.e. collect rent, pay the mortgage (in the owners name), undertake R&M, paying suppliers, charge the landlord a fee for doing so. It all seems at arms length with market rates for the service to be charged.

are there any connected persons issues in this sort of transaction?

[bd6759]

Yes. The charge for services must be at market rates.

The mortgage payment will be taxable income in the hands of the director.

[Feedback]

apologies if this is a little twp but what do you men when you say the mortgage payment is income etc etc?

[bd6759]

The mortgage belongs to the director. If the compamy pays it, it is treated as income paid to the director.

[Feedback]

of course.

silly question - is the mortgage interest a cost to the director also?

[bd6759]

Yes. But for tax purposes, what business income would he set it against? It can't be set against employment income.

[Feedback]

what I am asking is whether there is any method for the company to treat the mortgage interest payment as it's own expense?

[bd6759]

It is a payment to the director, therefore an expense of the company.

The director pays tax on this income.