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.
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.
Eric Mc said:
Kudos said:
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).
You bet there are tax implications.Eric Mc said:
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.
The use by me, would be Monday to Friday in order to facilitate my Consultancy in the East Midlands. Given that in the last 5 years or so my contracts have been 6 months in Telford, 2 years in Derby, 6 months in Stoke, 1.5 years in Derby and 6 months (or will be) in Hemel Hempstead, my ltd company has spent £10K plus on rent/hotels/digs in or near Derby. Looking forward I see more of the same. The next contract will be 12 months, in Derby. 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.
I assume that once this contract gets extended beyond 2 years I'd THEN be liable for benefit in kind for my use?
Corporation Tax on rental? Or in fact on the money that I didn't have to spend on digs/hotels/rent.
Note that DERBY council obviously used the plans more than once
http://www.rightmove.co.uk/property-for-sale/prope...
http://www.rightmove.co.uk/property-for-sale/prope...
Anyway, it took 4 days to get the agent to contact me, and he couldn't answer my simple questions
How long is the remaining lease?
Who owns the Freehold?
Are you sure there is an allocated car parking space, as there is no car park, and the 4 spaces on the road are not marked in any way.?
What is the ground rent and what have the residents had to pay for building maintenance in the past?
What he could tell me, was that the owner has decided to redo the kitchen, as he's had no interest.
I told him, I'm a cash buyer, I want to view it as is, as soon as possible (now that I have the wife's mandate) and I'll make an offer based on what I see now, and he can save himself the effort, as I'd rather put my own stamp on it.
I also struck lucky today. Having got nowhere with the questions that I asked the agent, I phoned the council to ask about renting the garages, and spoke to the housing officer. I gained the following information some more relevant than others:
1) There are no garages available because they are gradually taking them back, as people give them up. They plan to remove them but he couldn't tell me what they'd do with the land they are on. I see this as a risk, as it's an unknown.
2) The ones they still own are rented at 80 quid a week, and those people who have bought them, have not moved on. The tenants they have, don't turn over very often.
3) They have replaced the flat roof(s) a couple of years back, and replaced doors and refurbed the stairs and landings recently.
So am waiting for Agent to get back to me with a confirmation of my suggested viewing time.
http://www.rightmove.co.uk/property-for-sale/prope...
http://www.rightmove.co.uk/property-for-sale/prope...
Anyway, it took 4 days to get the agent to contact me, and he couldn't answer my simple questions
How long is the remaining lease?
Who owns the Freehold?
Are you sure there is an allocated car parking space, as there is no car park, and the 4 spaces on the road are not marked in any way.?
What is the ground rent and what have the residents had to pay for building maintenance in the past?
What he could tell me, was that the owner has decided to redo the kitchen, as he's had no interest.
I told him, I'm a cash buyer, I want to view it as is, as soon as possible (now that I have the wife's mandate) and I'll make an offer based on what I see now, and he can save himself the effort, as I'd rather put my own stamp on it.
I also struck lucky today. Having got nowhere with the questions that I asked the agent, I phoned the council to ask about renting the garages, and spoke to the housing officer. I gained the following information some more relevant than others:
1) There are no garages available because they are gradually taking them back, as people give them up. They plan to remove them but he couldn't tell me what they'd do with the land they are on. I see this as a risk, as it's an unknown.
2) The ones they still own are rented at 80 quid a week, and those people who have bought them, have not moved on. The tenants they have, don't turn over very often.
3) They have replaced the flat roof(s) a couple of years back, and replaced doors and refurbed the stairs and landings recently.
So am waiting for Agent to get back to me with a confirmation of my suggested viewing time.
worsy said:
Eeek Allenton!
I like to think it's Wilmorton http://goo.gl/maps/fQ8H2
http://goo.gl/maps/CBIUH
Almost City Point, and nearly Pride Park
okay. Update: Spoke with Eric, and my own accountant, and fully understand the tax implications of all this. (Thank you Eric)
However the estate agent's employee, is apparently struggling to get in touch with the vendor to ask him anything at all.
to quote zoopla :
First listed
£55,000 on 13th Feb 2014
Asking price changes
• £50,000 9.1% Reduced on: 21st Feb 2014
• £40,000 20.0% Reduced on: 12th Apr 2014
http://www.zoopla.co.uk/for-sale/details/31970926#...
However the estate agent's employee, is apparently struggling to get in touch with the vendor to ask him anything at all.
to quote zoopla :
First listed
£55,000 on 13th Feb 2014
Asking price changes
• £50,000 9.1% Reduced on: 21st Feb 2014
• £40,000 20.0% Reduced on: 12th Apr 2014
http://www.zoopla.co.uk/for-sale/details/31970926#...
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