Buying an office through own limited company?

[simong800]

Hi all,

I was keen to see if anyone had any advice they can pass on with something I am just beginning to explore.

I am a Director of my own limited company (powerfully built director etc, standard PH ) along with my business partner. We are a 2 man band without any particular plans to grow the business as it is relatively successful as is, without the headache and stress of managing a team. Our plan is to generate the maximum income we can, and make our money work for us.

As part of this strategy we have begun to explore whether we can buy an office. We currently rent a serviced office in town (Manchester) and spend circa £1200 a month on rent/landline/broadband, plus another say £250 a month on car parking. So over the last 3 years that's £52k ish that we have spent without seeing much back.

Is there a way our via our limited company we can buy, say a barn outside of the city, and convert it into an office and pay a mortgage instead of rent? Or buy a 2 story office building with a mortgage via the company, rent one story out to another firm and occupy the top floor ourselves for example?

I am sure this has been done, I'd be keen to get any insight from those with first hand experience to supplement the various bits of reading I am doing to find out more.

The idea of owning an office, potentially making money on any redevelopment/refurbishment of it, and it forming part of the retirement pot when it is paid off in 25 years time is quite appealing but I am sure there is more to it than that.

Many thanks in advance!

[simong800]

Thank you for the replies chaps. All very useful info and plenty for me to explore further.

I hadn't realised the option of buying personally and renting it to the company - as mentioned a good way to protect the asset if anything happened to the company....

The SIPP option is interesting but I have a nagging doubt as to the lack of flexibility in terms of getting money back out. Say for example we bought somewhere, added significant value and 10 years down the line wanted to cash in - that cash is stuck in the SIPP but there may be other investment opportunities I'd like to make outside of the SIPP. In a similar way, I am tending to invest via my stocks and shares ISA as opposed to filling my pension every year (making a token contribution to the pension too) as I hope to retire before pension age. Although that is of course some way off. Plenty of food for thought.

And to the poster asking about whether my accountant can help - he isn't the most forthcoming when anything goes beyond the realms of bookkeeping/tax returns etc! I emailed him 2 days ago asking for more info (as he mentioned it when he last came to see us) and I am still waiting for a reply

Thanks again, some really helpful info here and heaps to look into further.

[simong800]

alpertonian said:

We are a husband/wife limited company, who have bought three commercial units in the last three years, operating out of one and renting out the other two.

Normally VAT is not applicable on the purchase price of commercial property, but all three of ours had VAT applied under the "opt to tax" rule. If you are VAT registered or are charged VAT on the purchase make sure you research "opt to tax" thoroughly. It's not a problem but you must understand it.

It's a complicated area... but means that to reclaim the VAT we paid on the purchase price, we have to charge VAT on any rental income.

Complicated even more if a tenant is a charity and therefore VAT exempt.

Good luck.

Thank you!