Talk me out of this daft idea for my Ltd company
Discussion
I have a 12 month contract in Derby, some 100 miles from home, the start date which will be in about 8 weeks.
Usually I start off in b&b 4 nights a week, then find a spare room, which in Derby is about £350 to £400 a month all bills inclusive.
Problem with that is that wifey wants to visit and hates the whole "living like a f
king student" thing, so I was looking at renting a flat or house, but a) 99% are unfurnished b) They all say no pets, and She'd like to bring the dog, c) it's dead money.
Anyway I saw this:
http://www.rightmove.co.uk/property-for-sale/prope...
Now in terms of buying it, I have a "st hits the fan fund" in my ltd company, and could pay cash.
In terms of living in it, I would be doing it up, during the week.
I'd spend the same on doing it up as I'd spend on Rent, and when contract is finished I would rent it out. I say I, but I mean the Ltd company would rent it out.
Pro's - I'd still have a fund in my business to cover the gaps. It's never going to loose value, it's 300 yrds from Bombardier, 1 mile from Rolls Royce, 4 miles from Toyota, and it's within spitting distance of DCFC. If the contract is longer than 12 months, I can continue to use it midweek.
If I don't have a loan, there is no risk if I can't get the right tenants.
If I rent it out, I don't have to take the cash, and can leave it in ltd company to grow another
Cons - If my contract went tits up, I'd have to do it up at weekends, It's only one bed.
Should I be looking at using the money to get leverage for a larger BTL loan and a nicer place ?
Tax issues ?
As far as the actual understanding of the risks of BTLing, I've done mucho research and realise that if you do it wrong, you can get screwed, and even if you do it right it can be a hassle, but I've been thinking too long about this.
Finally, there's the "convincing" my wife. I'm selling the idea as a) Short term - better investment than the bank b) Long term - this the learning property that leads to a portfolio which is better than her pension.
Usually I start off in b&b 4 nights a week, then find a spare room, which in Derby is about £350 to £400 a month all bills inclusive.
Problem with that is that wifey wants to visit and hates the whole "living like a f
king student" thing, so I was looking at renting a flat or house, but a) 99% are unfurnished b) They all say no pets, and She'd like to bring the dog, c) it's dead money.Anyway I saw this:
http://www.rightmove.co.uk/property-for-sale/prope...
Now in terms of buying it, I have a "s
t hits the fan fund" in my ltd company, and could pay cash. In terms of living in it, I would be doing it up, during the week.
I'd spend the same on doing it up as I'd spend on Rent, and when contract is finished I would rent it out. I say I, but I mean the Ltd company would rent it out.
Pro's - I'd still have a fund in my business to cover the gaps. It's never going to loose value, it's 300 yrds from Bombardier, 1 mile from Rolls Royce, 4 miles from Toyota, and it's within spitting distance of DCFC. If the contract is longer than 12 months, I can continue to use it midweek.
If I don't have a loan, there is no risk if I can't get the right tenants.
If I rent it out, I don't have to take the cash, and can leave it in ltd company to grow another
Cons - If my contract went tits up, I'd have to do it up at weekends, It's only one bed.
Should I be looking at using the money to get leverage for a larger BTL loan and a nicer place ?
Tax issues ?
As far as the actual understanding of the risks of BTLing, I've done mucho research and realise that if you do it wrong, you can get screwed, and even if you do it right it can be a hassle, but I've been thinking too long about this.
Finally, there's the "convincing" my wife. I'm selling the idea as a) Short term - better investment than the bank b) Long term - this the learning property that leads to a portfolio which is better than her pension.
What do you think it would rent for?
Would you want it in the Ltd company name?
Could you not buy it via a pension fund?
If you have £40k tucked away for rainy days can you be #%##*€ with the agro of a BTL for a return of £100 a week (ish) with very little capital growth in say the next 5 years?
Would you want it in the Ltd company name?
Could you not buy it via a pension fund?
If you have £40k tucked away for rainy days can you be #%##*€ with the agro of a BTL for a return of £100 a week (ish) with very little capital growth in say the next 5 years?
Seems like a complete winner to me mate.
Especially as you can buy the thing outright, and it's a 'do-er-upper...'
In my experience, whatever happens with the economy, markets, referendums etc. etc. etc. - overall, you can't go wrong with property.
I have 4 BTL's which are all mortgaged (bought between 2002 and 2006), and even with the mortgages, and the fact that I bought them all as new builds (I didn't have the time / inclination for doing them up) they have all risen in value, despite the recession.
Plus, since I took the decision to go to Uni and study for a degree full-time 2 years ago (I will graduate next August) my BTL property profits have basically financed my bills and living as a student in the meantime.
Bricks and mortar, still the soundest investment, as ever. You might have to wait a while, and ride out the market / local fads / local trends....but if you own it outright, you can afford to ride out any storms, and you will always win in the end.
Go for it. The market is only going one way now!
Especially as you can buy the thing outright, and it's a 'do-er-upper...'
In my experience, whatever happens with the economy, markets, referendums etc. etc. etc. - overall, you can't go wrong with property.
I have 4 BTL's which are all mortgaged (bought between 2002 and 2006), and even with the mortgages, and the fact that I bought them all as new builds (I didn't have the time / inclination for doing them up) they have all risen in value, despite the recession.
Plus, since I took the decision to go to Uni and study for a degree full-time 2 years ago (I will graduate next August) my BTL property profits have basically financed my bills and living as a student in the meantime.
Bricks and mortar, still the soundest investment, as ever. You might have to wait a while, and ride out the market / local fads / local trends....but if you own it outright, you can afford to ride out any storms, and you will always win in the end.
Go for it. The market is only going one way now!
tight fart said:
What do you think it would rent for?
Would you want it in the Ltd company name?
Could you not buy it via a pension fund?
If you have £40k tucked away for rainy days can you be #%##*€ with the agro of a BTL for a return of £100 a week (ish) with very little capital growth in say the next 5 years?
£400 a month Call it £4K a year. Call it 10%. Would you want it in the Ltd company name?
Could you not buy it via a pension fund?
If you have £40k tucked away for rainy days can you be #%##*€ with the agro of a BTL for a return of £100 a week (ish) with very little capital growth in say the next 5 years?
I can't see why it matters if it's in the ltd company name. Maybe my accountant might shed a bit of light on it. The only issue is that if I wanted to take equity out of it I couldn't get a BTL mortgage whilst the ltd company owned it
Can you do that ? (the pension fund thing?)
£100 a week for a lot of hassle sounds like a #%##*€ but would be a good learning exercise.
Ray Luxury-Yacht said:
Seems like a complete winner to me mate.
Especially as you can buy the thing outright, and it's a 'do-er-upper...'
In my experience, whatever happens with the economy, markets, referendums etc. etc. etc. - overall, you can't go wrong with property.
I have 4 BTL's which are all mortgaged (bought between 2002 and 2006), and even with the mortgages, and the fact that I bought them all as new builds (I didn't have the time / inclination for doing them up) they have all risen in value, despite the recession.
Plus, since I took the decision to go to Uni and study for a degree full-time 2 years ago (I will graduate next August) my BTL property profits have basically financed my bills and living as a student in the meantime.
Bricks and mortar, still the soundest investment, as ever. You might have to wait a while, and ride out the market / local fads / local trends....but if you own it outright, you can afford to ride out any storms, and you will always win in the end.
Go for it. The market is only going one way now!
For someone who I always expect to disagree with, RLY^^ always seems to come up with posts that I inherently agree with-this is yet another one Especially as you can buy the thing outright, and it's a 'do-er-upper...'
In my experience, whatever happens with the economy, markets, referendums etc. etc. etc. - overall, you can't go wrong with property.
I have 4 BTL's which are all mortgaged (bought between 2002 and 2006), and even with the mortgages, and the fact that I bought them all as new builds (I didn't have the time / inclination for doing them up) they have all risen in value, despite the recession.
Plus, since I took the decision to go to Uni and study for a degree full-time 2 years ago (I will graduate next August) my BTL property profits have basically financed my bills and living as a student in the meantime.
Bricks and mortar, still the soundest investment, as ever. You might have to wait a while, and ride out the market / local fads / local trends....but if you own it outright, you can afford to ride out any storms, and you will always win in the end.
Go for it. The market is only going one way now!
(I'm barring that depressing period he went through a few months back where he seemed to be in a right mope!)
tight fart said:
What do you think it would rent for?
Would you want it in the Ltd company name?
Could you not buy it via a pension fund?
If you have £40k tucked away for rainy days can you be #%##*€ with the agro of a BTL for a return of £100 a week (ish) with very little capital growth in say the next 5 years?
I do not think that the pension route can work on such a project. I do think the idea has serious merit and the OP should cut costs and get a lot more control on this basis. I do recommend discussions with your accountant and lawyers on the taxation implications before beginning anything and folling their advice on how best to avoid them. It sounds an excellent idea to me.Would you want it in the Ltd company name?
Could you not buy it via a pension fund?
If you have £40k tucked away for rainy days can you be #%##*€ with the agro of a BTL for a return of £100 a week (ish) with very little capital growth in say the next 5 years?
You may find working all week and repairing your property and finding time for SWMBO and staying awake coud be a challenge. But all the work you do should result in reduced csts and therefore greater wealth creation. It sounds like a damned good idea to me and you have youth on your side. I would go for it that is an excellent idea.
If the company buys the property there definitely will be tax issues -
Benefit in Kind on your or your family's use of the property
Corporation Tax on rental profits (which would possibly be lower than Income Tax)
Capital Gains Tax in the limited company when the property is sold (with loss of the £11,000 personal CGT relief which companies don't get. If the property was owned jointly by you and your wife you would get a combined personal Capital Gains Tax allowance of £22,000).
Additional taxation on you personally if you remove the sale proceeds of the property from the company after the property is sold.
Benefit in Kind on your or your family's use of the property
Corporation Tax on rental profits (which would possibly be lower than Income Tax)
Capital Gains Tax in the limited company when the property is sold (with loss of the £11,000 personal CGT relief which companies don't get. If the property was owned jointly by you and your wife you would get a combined personal Capital Gains Tax allowance of £22,000).
Additional taxation on you personally if you remove the sale proceeds of the property from the company after the property is sold.
LaurasOtherHalf said:
Ray Luxury-Yacht said:
Seems like a complete winner to me mate.
Especially as you can buy the thing outright, and it's a 'do-er-upper...'
In my experience, whatever happens with the economy, markets, referendums etc. etc. etc. - overall, you can't go wrong with property.
I have 4 BTL's which are all mortgaged (bought between 2002 and 2006), and even with the mortgages, and the fact that I bought them all as new builds (I didn't have the time / inclination for doing them up) they have all risen in value, despite the recession.
Plus, since I took the decision to go to Uni and study for a degree full-time 2 years ago (I will graduate next August) my BTL property profits have basically financed my bills and living as a student in the meantime.
Bricks and mortar, still the soundest investment, as ever. You might have to wait a while, and ride out the market / local fads / local trends....but if you own it outright, you can afford to ride out any storms, and you will always win in the end.
Go for it. The market is only going one way now!
For someone who I always expect to disagree with, RLY^^ always seems to come up with posts that I inherently agree with-this is yet another one Especially as you can buy the thing outright, and it's a 'do-er-upper...'
In my experience, whatever happens with the economy, markets, referendums etc. etc. etc. - overall, you can't go wrong with property.
I have 4 BTL's which are all mortgaged (bought between 2002 and 2006), and even with the mortgages, and the fact that I bought them all as new builds (I didn't have the time / inclination for doing them up) they have all risen in value, despite the recession.
Plus, since I took the decision to go to Uni and study for a degree full-time 2 years ago (I will graduate next August) my BTL property profits have basically financed my bills and living as a student in the meantime.
Bricks and mortar, still the soundest investment, as ever. You might have to wait a while, and ride out the market / local fads / local trends....but if you own it outright, you can afford to ride out any storms, and you will always win in the end.
Go for it. The market is only going one way now!
(I'm barring that depressing period he went through a few months back where he seemed to be in a right mope!)
It makes no sense whatsoever - it's like saying because you bought gold at $200 and it went to $1000 then it's still a safe investment and will only keep going up. Eh?
Property is an awful investment IMO - and over nearly every period in history has been outperformed by the stock market.
Another option could be to take the money out of the company and buy personally for cash (possible tax implication - depends when the money is paid back).
Do it up, presume will be worth more afterwards? Stick a BTL mortgage on it. Should be buttons I/O. Let it out long term.
As you say, you will spend £5k on rent during the contract so why not spend it on your own property? Do it.
I just finished two and a half years in London and regret not buying at the start.
Do it up, presume will be worth more afterwards? Stick a BTL mortgage on it. Should be buttons I/O. Let it out long term.
As you say, you will spend £5k on rent during the contract so why not spend it on your own property? Do it.
I just finished two and a half years in London and regret not buying at the start.
Eric Mc said:
Capital Gains Tax in the limited company when the property is sold (with loss of the £11,000 personal CGT relief which companies don't get. If the property was owned jointly by you and your wife you would get a combined personal Capital Gains Tax allowance of £22,000).
The company will benefit from indexation allowance which should mitigate (perhaps eliminate) the loss of any personal CGT exemption.David
If you take the money out of the company to pay for it, you are going to get walloped for tax are you not?
The double-whammy being the way HMRC use "last years" earnings to forward charge you half of next years tax, so you'll end up paying more tax than you need to, and will have to wait for the rebate until the end of the next tax year.
Maybe.
The double-whammy being the way HMRC use "last years" earnings to forward charge you half of next years tax, so you'll end up paying more tax than you need to, and will have to wait for the rebate until the end of the next tax year.
Maybe.
mattdaniels said:
If you take the money out of the company to pay for it, you are going to get walloped for tax are you not?
Reply - HOW and HOW MUCH you draw from the company determines how much tax (if any) is payable
The double-whammy being the way HMRC use "last years" earnings to forward charge you half of next years tax, so you'll end up paying more tax than you need to, and will have to wait for the rebate until the end of the next tax year.
Reply - Payments on Account can be reduced (to nil) if appropriate) - if the next year's tax liability is going to be less than the previous year's one.
So, if you do generate a large Self Assessment tax bill in (say) 2014/15, it does not automatically mean you have to pay ANY Payments on Account for 2015/16.
Reply - HOW and HOW MUCH you draw from the company determines how much tax (if any) is payable
The double-whammy being the way HMRC use "last years" earnings to forward charge you half of next years tax, so you'll end up paying more tax than you need to, and will have to wait for the rebate until the end of the next tax year.
Reply - Payments on Account can be reduced (to nil) if appropriate) - if the next year's tax liability is going to be less than the previous year's one.
So, if you do generate a large Self Assessment tax bill in (say) 2014/15, it does not automatically mean you have to pay ANY Payments on Account for 2015/16.
gregf40 said:
Property is an awful investment IMO - and over nearly every period in history has been outperformed by the stock market.
Out of interest have you got anything to back that up? I always thought that other than the 90's stock market peak they'd both done fairly similar, but in general housing tends to be lower risk because the crashes tend to be smallergregf40 said:
LaurasOtherHalf said:
Ray Luxury-Yacht said:
Seems like a complete winner to me mate.
Especially as you can buy the thing outright, and it's a 'do-er-upper...'
In my experience, whatever happens with the economy, markets, referendums etc. etc. etc. - overall, you can't go wrong with property.
I have 4 BTL's which are all mortgaged (bought between 2002 and 2006), and even with the mortgages, and the fact that I bought them all as new builds (I didn't have the time / inclination for doing them up) they have all risen in value, despite the recession.
Plus, since I took the decision to go to Uni and study for a degree full-time 2 years ago (I will graduate next August) my BTL property profits have basically financed my bills and living as a student in the meantime.
Bricks and mortar, still the soundest investment, as ever. You might have to wait a while, and ride out the market / local fads / local trends....but if you own it outright, you can afford to ride out any storms, and you will always win in the end.
Go for it. The market is only going one way now!
For someone who I always expect to disagree with, RLY^^ always seems to come up with posts that I inherently agree with-this is yet another one Especially as you can buy the thing outright, and it's a 'do-er-upper...'
In my experience, whatever happens with the economy, markets, referendums etc. etc. etc. - overall, you can't go wrong with property.
I have 4 BTL's which are all mortgaged (bought between 2002 and 2006), and even with the mortgages, and the fact that I bought them all as new builds (I didn't have the time / inclination for doing them up) they have all risen in value, despite the recession.
Plus, since I took the decision to go to Uni and study for a degree full-time 2 years ago (I will graduate next August) my BTL property profits have basically financed my bills and living as a student in the meantime.
Bricks and mortar, still the soundest investment, as ever. You might have to wait a while, and ride out the market / local fads / local trends....but if you own it outright, you can afford to ride out any storms, and you will always win in the end.
Go for it. The market is only going one way now!
(I'm barring that depressing period he went through a few months back where he seemed to be in a right mope!)
It makes no sense whatsoever - it's like saying because you bought gold at $200 and it went to $1000 then it's still a safe investment and will only keep going up. Eh?
Property is an awful investment IMO - and over nearly every period in history has been outperformed by the stock market.
Eric Mc said:
mattdaniels said:
If you take the money out of the company to pay for it, you are going to get walloped for tax are you not?
Reply - HOW and HOW MUCH you draw from the company determines how much tax (if any) is payable
The double-whammy being the way HMRC use "last years" earnings to forward charge you half of next years tax, so you'll end up paying more tax than you need to, and will have to wait for the rebate until the end of the next tax year.
Reply - Payments on Account can be reduced (to nil) if appropriate) - if the next year's tax liability is going to be less than the previous year's one.
So, if you do generate a large Self Assessment tax bill in (say) 2014/15, it does not automatically mean you have to pay ANY Payments on Account for 2015/16.
Reply - HOW and HOW MUCH you draw from the company determines how much tax (if any) is payable
The double-whammy being the way HMRC use "last years" earnings to forward charge you half of next years tax, so you'll end up paying more tax than you need to, and will have to wait for the rebate until the end of the next tax year.
Reply - Payments on Account can be reduced (to nil) if appropriate) - if the next year's tax liability is going to be less than the previous year's one.
So, if you do generate a large Self Assessment tax bill in (say) 2014/15, it does not automatically mean you have to pay ANY Payments on Account for 2015/16.
mattdaniels said:
Eric Mc said:
mattdaniels said:
If you take the money out of the company to pay for it, you are going to get walloped for tax are you not?
Reply - HOW and HOW MUCH you draw from the company determines how much tax (if any) is payable
The double-whammy being the way HMRC use "last years" earnings to forward charge you half of next years tax, so you'll end up paying more tax than you need to, and will have to wait for the rebate until the end of the next tax year.
Reply - Payments on Account can be reduced (to nil) if appropriate) - if the next year's tax liability is going to be less than the previous year's one.
So, if you do generate a large Self Assessment tax bill in (say) 2014/15, it does not automatically mean you have to pay ANY Payments on Account for 2015/16.
Reply - HOW and HOW MUCH you draw from the company determines how much tax (if any) is payable
The double-whammy being the way HMRC use "last years" earnings to forward charge you half of next years tax, so you'll end up paying more tax than you need to, and will have to wait for the rebate until the end of the next tax year.
Reply - Payments on Account can be reduced (to nil) if appropriate) - if the next year's tax liability is going to be less than the previous year's one.
So, if you do generate a large Self Assessment tax bill in (say) 2014/15, it does not automatically mean you have to pay ANY Payments on Account for 2015/16.
Being in business on your own can be a lonely business. For that reason the professionals you chose can make a very real difference. The choice of accountant affects businessmen to a considerable degree because who else has the knowledge and your interests at heart. Definitely worth a change if you are not 100% happy.
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