This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.


Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Buy to Let, Business or Personal

Joined:Mon Nov 23, 2020 10:14 pm
Buy to Let, Business or Personal

Postby pete710UK » Mon Nov 23, 2020 10:23 pm

Hello, I hope someone can help, I am buying small house for a friend who has fallen on hard times, the plan is to buy the property for him and his family to rent for a few years before they buy it from me for the same price I paid. They hope to have a deposit within a few years at that time I will sell the house to them. I am wondering if I should buy the house using existing company funds (currently earning no interest) or use personal savings which we could just about afford. We hold 2 properties as buy to lets personally so feel that I would be better off paying tax at limited co rates rather than higher rate? any help very welcome. many thanks

Joined:Fri May 16, 2014 3:47 pm

Re: Buy to Let, Business or Personal

Postby AGoodman » Wed Dec 02, 2020 11:30 am

Probably makes sense on the purchase and sale but bear in mind that if the price has risen before the sale:

- a sale at an undervalue will be a chargeable transfer for IHT by the shareholders - this should be absorbed by your annual exemption and nil rate band so no actual tax to pay. It could be an issue if you then died within 7 years because it would reduce the nil rate band available to set against other assets in your estate.
- there must be a good chance/risk that the undervalue could be treated as a deemed distribution or benefit to you (as shareholder or director) so subject to income tax in your hands.

Others may well known the details and level of risk for point 2 better than me.

Joined:Sat Feb 01, 2014 3:26 pm

Re: Buy to Let, Business or Personal

Postby bd6759 » Wed Dec 02, 2020 11:01 pm

You could lend him the money to buy the home, with security over it (a mortgage). It could be interest only or capital and interest, with a repayment level set similar to the rent you would charge. When he can afford it, he could re-mortgage with a lender to repay you.

Return to “Business Tax”