My LTD company buying my BTL
Discussion
Hi all,
I currently have a BTL property that I paid £185k for. Remaining mortgage is £130k.
I also have a residential mortgage of £220k. (Neither mortgage is currently tied in so no overpayment charges).
I have a LTD company that I am sole director of, which currently has £75k in cash assets but will have £200k in cash assets this time next year.
I'm in a dilemma as to what to do with the assets that are building up in my company, and am considering investments (I've never invested in anything in the past and am a novice who is currently in discussions with an IFA).
A discussion yesterday with the IFA was interesting; could my company buy my BTL property? Anyone done this or know more about it?
The way the IFA described it was as follows;
Pros - Get £185k (for arguements sake) out of my company into my personal account. Use this to pay off my residential mortgage and save £xxx in interest over the next 20 years.
The company can offset the interest on the mortgage (something I wont be able to do personally in a few years due to new BTL laws)
Cons - Will pay £7.5k stamp duty.
Am I missing something?
Many thanks
I currently have a BTL property that I paid £185k for. Remaining mortgage is £130k.
I also have a residential mortgage of £220k. (Neither mortgage is currently tied in so no overpayment charges).
I have a LTD company that I am sole director of, which currently has £75k in cash assets but will have £200k in cash assets this time next year.
I'm in a dilemma as to what to do with the assets that are building up in my company, and am considering investments (I've never invested in anything in the past and am a novice who is currently in discussions with an IFA).
A discussion yesterday with the IFA was interesting; could my company buy my BTL property? Anyone done this or know more about it?
The way the IFA described it was as follows;
Pros - Get £185k (for arguements sake) out of my company into my personal account. Use this to pay off my residential mortgage and save £xxx in interest over the next 20 years.
The company can offset the interest on the mortgage (something I wont be able to do personally in a few years due to new BTL laws)
Cons - Will pay £7.5k stamp duty.
Am I missing something?
Many thanks
Sorry for sounding stupid but some of what you say confuses me (as I sad I'm no expert on this).
Eric Mc - Yes the property is in my sole name, and it generates profits. Why would I possibly pay NI when I withdraw from the company?
I purchased the house for £185k 7 years ago so its not really gone up or down in value much. I could sell it to the company for £196k to make use of the £11k CGT allowance couldnt I? The house is realistically worth £180-190k ish.
Obviously I (read: my IFA) need to work the figures out properly. Anyone any idea of how to work out what all these charges might be? I'd essentially save £30-50k (need to check figures when I get home) in interest payments alone on my residential mortgage if I used the money to pay that off... I suspect I'd struggle to make £30-50k if investing the £185k elsewhere?
I am resigned to the fact I have to pay the CGT somewhere so why does it matter whether I pay it or my company?
Eric Mc - Yes the property is in my sole name, and it generates profits. Why would I possibly pay NI when I withdraw from the company?
I purchased the house for £185k 7 years ago so its not really gone up or down in value much. I could sell it to the company for £196k to make use of the £11k CGT allowance couldnt I? The house is realistically worth £180-190k ish.
Obviously I (read: my IFA) need to work the figures out properly. Anyone any idea of how to work out what all these charges might be? I'd essentially save £30-50k (need to check figures when I get home) in interest payments alone on my residential mortgage if I used the money to pay that off... I suspect I'd struggle to make £30-50k if investing the £185k elsewhere?
I am resigned to the fact I have to pay the CGT somewhere so why does it matter whether I pay it or my company?
Thanks Eric - So what would you (and others) do in my position, as follows?
£75k cash plus an additional £75-100k per year building up in my LTD company
£60k per year salaried (full time job)
Fiancee (will be married in March) earns £40k salaried.
Both salaries more than cover the mortgages.
1 x residential mortgage in both names - house worth £300k, mortgage of £220k
1 x BTL in my sole name - house worth £180k, mortgage of 130k
Both of us have NHS pensions (one of the best on the market) plus my BTL, which will fund retirement
I am concious I have £330k of debt, which is currently manageable on our salaries, but an increasingly large amount of cash in the LTD company. We are 31 and 32 years old and although we want to save for the future, we feel we have this covered through our pensions and BTL. My IFA keeps saying to 'stick it in pensions' but it makes me feel like I am sacrificing my (relative) youth (by working so many hours), only to reap the benefits when im 60+ years old....
So many decisions and if I'm honest I dont really understand most of this investment speak.
Thanks again
£75k cash plus an additional £75-100k per year building up in my LTD company
£60k per year salaried (full time job)
Fiancee (will be married in March) earns £40k salaried.
Both salaries more than cover the mortgages.
1 x residential mortgage in both names - house worth £300k, mortgage of £220k
1 x BTL in my sole name - house worth £180k, mortgage of 130k
Both of us have NHS pensions (one of the best on the market) plus my BTL, which will fund retirement
I am concious I have £330k of debt, which is currently manageable on our salaries, but an increasingly large amount of cash in the LTD company. We are 31 and 32 years old and although we want to save for the future, we feel we have this covered through our pensions and BTL. My IFA keeps saying to 'stick it in pensions' but it makes me feel like I am sacrificing my (relative) youth (by working so many hours), only to reap the benefits when im 60+ years old....
So many decisions and if I'm honest I dont really understand most of this investment speak.
Thanks again
Ive just checked the mortgage documents and I will pay £126k in interest alone on my residential mortgage. Surely paying this off by getting my LTD company to buy my BTL is the way forward here?
Even with CGT and stamp duty I will be quids in massively if I reduce my residential mortgage from £220k to £35k.
Am I really missing the plot here? Apologies if I'm way off track but this seems a no brainer...
Even with CGT and stamp duty I will be quids in massively if I reduce my residential mortgage from £220k to £35k.
Am I really missing the plot here? Apologies if I'm way off track but this seems a no brainer...
Sarnie said:
^ That was my point.....
Oh... A bit of an oversight that one... 
I'm here thinking I will get £180k cash, forgetting I owe the bank the mortgage. Wouldnt be worth it then, based on the fact I will only get £55k cash, which is the same as if I drew £75k out as dividends
Back to the drawing board
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