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Where Taxpayers and Advisers Meet

Buy a residential property using my company profits

IntoleranceLab
Posts:8
Joined:Mon Jul 30, 2018 6:36 am
Buy a residential property using my company profits

Postby IntoleranceLab » Mon Mar 25, 2019 10:25 pm

Hi Guys

I have a successful company and Im looking to purchase a new home for myself in the near future.

I would like to know the pros and cons of purchasing this new home using my ltd company profits and then renting it to myself?

On first reflection, if I withdraw the deposit etc to buy I am going to pay the high tax upon it before handing it over.

Would this be an instant saving if I were to use the company?

Also, I own other properties so would this save a small amount on 2nd home stamp duty ?

I am just wondering whether this would be a good way to keep my personal tax bill down ?

Any thoughts and input most welcome.

Regards

David

AdamS93
Posts:268
Joined:Tue Sep 26, 2017 6:28 pm

Re: Buy a residential property using my company profits

Postby AdamS93 » Tue Mar 26, 2019 1:16 pm

There are a lot of cons.

1. A company will pay the SDLT surcharge anyway so there will be no SDLT saving
2. A company doesn't benefit from PPR relief meaning there may be significant tax to pay when the property is sold
3. The company will pay corporation tax on the rent it receives from you and to pay that rent you will have to withdraw additional dividends I am guessing
4. The company will probably lose it's trading status for the purposes of entrepreneurs relief
5. You won't own the house, the company will and to get the property out the corporate entity, there will be significant tax charges for both yourself and the company

Your plan is an example of short-termism. In the long run, you will be better off generally if you owned the property personally.

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Buy a residential property using my company profits

Postby Jholm » Tue Mar 26, 2019 1:53 pm

Not to mention the possibility of benefits in kind arising, creating a charge on both the 'employer' and 'employee':

https://www.gov.uk/expenses-and-benefits-accommodation

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Buy a residential property using my company profits

Postby AGoodman » Tue Mar 26, 2019 6:38 pm

A final one - if the company ever got into difficulty you could lose your home.


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