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Where Taxpayers and Advisers Meet

Loan for buy-to-let property

Apibiri
Posts:1
Joined:Tue Jul 18, 2017 9:29 pm
Loan for buy-to-let property

Postby Apibiri » Tue Jul 18, 2017 9:41 pm

Hi,

I run my own business: a Limited Company registered in London which has more than one trading purpose. My Ltd Company is registered at Companies House for SIC 68209 “Other letting and operating of own or leased real estate”, therefore one nature of business (or business purpose) is “operating”and letting own properties.
My Ltd Company owns a property in London which is let out to professionals.

Question No 1: I have noticed that most of the businesses treat rents either as non-trading income or other-income in the Corporation Tax accounts. Being “letting out own property” a trade purpose, shall the monthly income rent be treat as trade income?

I am thinking to get a business loan for my business to buy-to-let another property for it.
My concerns is again about Corporation Tax: buying and letting is a trade purpose of the business, therefore that would be considered as trade loan.

Question No 2: would the loan interest be considered as trade cost (against the trade income)?

Question No 3: would the loan repayments (interests apart) be considered as trade cost?

I hope you can help me to clarify these points

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Loan for buy-to-let property

Postby bd6759 » Tue Jul 18, 2017 11:02 pm

Receiving income from property is not a trade. It is not trading income and therefore the interest is not a trading expense. It is however still an allowable expense for CT purposes under the NTLR rules, and any deficit can be set against other profits.

The rules are complex. You should speak with your accountant.


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