BTL as a ltd company?
Discussion
I was speaking with a mortgage advisor and he advised to go with a 20% deposit for a decent rate. He mentioned that 100% mortgages are available from certain lenders, naturally they have a high rate.
I'm looking at buying up to 3 properties at once. Any issues with taking out a personal loan to cover the deposit?
I'm looking at buying up to 3 properties at once. Any issues with taking out a personal loan to cover the deposit?
Edited by goldar on Saturday 31st December 19:38
goldar said:
It sounds simple, BTL a few properties with interest only mortgages through a ltd company. Why isn't everyone doing this? What am I missing?
Probably due to interest rates, imminent risk of house price crash and increasingly unfavourable landlord terms, apart from that nothing.[quote=__]
One tax consideration. If you are a 40% tax payer, the interest you pay, (which is going up) is not seen as a business expense, if you do it via self assessment. Given that interest rates will be over 7% that's a lot of extra tax you pay. goldar said:
It sounds simple, BTL a few properties with interest only mortgages through a ltd company. Why isn't everyone doing this? What am I missing?
Probably due to interest rates, imminent risk of house price crash and increasingly unfavourable landlord terms, apart from that nothing.The way around this is to do it via a Ltd company.
Lucky for us, my wife has a nominated 99% interest and its her only income, so interest is tax deduct able. When our fixed rate ends, the interest will be the same as the rent. (we have a lump sum to pay it off so not an issue, otherwise, we'd have been selling it to the OP
Sorry in advance OP for intruding on your thread...
We're in a situation where we've borrowed against our main property to purchase a second property (we bought this to add the garden space to our main property).
In theory we own the second property outright - for those in the know, is there a mechanism whereby we could set up a Ltd for future rentals - if we go this way ? I expect it would require some financial gymnastics to accomplish - if at all possible. There's a not insignificant amount of money to be spent on renovation costs.
We're in a situation where we've borrowed against our main property to purchase a second property (we bought this to add the garden space to our main property).
In theory we own the second property outright - for those in the know, is there a mechanism whereby we could set up a Ltd for future rentals - if we go this way ? I expect it would require some financial gymnastics to accomplish - if at all possible. There's a not insignificant amount of money to be spent on renovation costs.
Chris Type R said:
Sorry in advance OP for intruding on your thread...
We're in a situation where we've borrowed against our main property to purchase a second property (we bought this to add the garden space to our main property).
In theory we own the second property outright - for those in the know, is there a mechanism whereby we could set up a Ltd for future rentals - if we go this way ? I expect it would require some financial gymnastics to accomplish - if at all possible. There's a not insignificant amount of money to be spent on renovation costs.
You need a good accountant and I am not one, but, if you own it out right, then there's no mortgage on it? If you planned to swap the borrowing to gain the tax advantage of having the interest as a business cost, then maybe it being in a Ltd company would work better. But now you have to sell the BTL to the limited company and pay stamp duty again.....We're in a situation where we've borrowed against our main property to purchase a second property (we bought this to add the garden space to our main property).
In theory we own the second property outright - for those in the know, is there a mechanism whereby we could set up a Ltd for future rentals - if we go this way ? I expect it would require some financial gymnastics to accomplish - if at all possible. There's a not insignificant amount of money to be spent on renovation costs.
Ah but those renovation costs. Without the Ltd You can only deduct repairs once you have started renting, but I assume that with the Ltd company you could treat it as a first year loss. And carry that loss through to subsequent years?
Yes you need an accountant....
Pit Pony said:
Chris Type R said:
Sorry in advance OP for intruding on your thread...
We're in a situation where we've borrowed against our main property to purchase a second property (we bought this to add the garden space to our main property).
In theory we own the second property outright - for those in the know, is there a mechanism whereby we could set up a Ltd for future rentals - if we go this way ? I expect it would require some financial gymnastics to accomplish - if at all possible. There's a not insignificant amount of money to be spent on renovation costs.
You need a good accountant and I am not one, but, if you own it out right, then there's no mortgage on it? If you planned to swap the borrowing to gain the tax advantage of having the interest as a business cost, then maybe it being in a Ltd company would work better. But now you have to sell the BTL to the limited company and pay stamp duty again.....We're in a situation where we've borrowed against our main property to purchase a second property (we bought this to add the garden space to our main property).
In theory we own the second property outright - for those in the know, is there a mechanism whereby we could set up a Ltd for future rentals - if we go this way ? I expect it would require some financial gymnastics to accomplish - if at all possible. There's a not insignificant amount of money to be spent on renovation costs.
Ah but those renovation costs. Without the Ltd You can only deduct repairs once you have started renting, but I assume that with the Ltd company you could treat it as a first year loss. And carry that loss through to subsequent years?
Yes you need an accountant....
goldar said:
I was speaking with a mortgage advisor and he advised to go with a 20% deposit for a decent rate. He mentioned that 100% mortgages are available from certain lenders, naturally they have a high rate.
I'm looking at buying up to 3 properties at once. Any issues with taking out a personal loan to cover the deposit?
As suggested, you need to speak to an accountant. As one myself, I'd be telling you it's a bad idea. You also need to find a decent mortgage advisor as 30% deposit is the minimum these days.I'm looking at buying up to 3 properties at once. Any issues with taking out a personal loan to cover the deposit?
Edited by goldar on Saturday 31st December 19:38
In theory 25% deposit is fine for ltd co BUT most stress tests mean that you need a greater deposit to make it balance.
The problem with ltd is that the market for lenders is tiny, very few deals to chose from, lender fees are much higher, more solicitor costs due to needing two firms. The rates are much higher so the actual cost of finance is much higher.
The problem with ltd is that the market for lenders is tiny, very few deals to chose from, lender fees are much higher, more solicitor costs due to needing two firms. The rates are much higher so the actual cost of finance is much higher.
Chris Type R said:
Sorry in advance OP for intruding on your thread...
We're in a situation where we've borrowed against our main property to purchase a second property (we bought this to add the garden space to our main property).
In theory we own the second property outright - for those in the know, is there a mechanism whereby we could set up a Ltd for future rentals - if we go this way ? I expect it would require some financial gymnastics to accomplish - if at all possible. There's a not insignificant amount of money to be spent on renovation costs.
You could have a limited company to charge management fees, but it depends on your personal circumstances as to whether there's any point. Unlikely on one property. The rental income is yours and can't be moved to a ltd without the property moving too.We're in a situation where we've borrowed against our main property to purchase a second property (we bought this to add the garden space to our main property).
In theory we own the second property outright - for those in the know, is there a mechanism whereby we could set up a Ltd for future rentals - if we go this way ? I expect it would require some financial gymnastics to accomplish - if at all possible. There's a not insignificant amount of money to be spent on renovation costs.
Pit Pony said:
Ah but those renovation costs. Without the Ltd You can only deduct repairs once you have started renting, but I assume that with the Ltd company you could treat it as a first year loss. And carry that loss through to subsequent years?
Ltd would be a bit more flexible, but if they increase the value of the property, then they will be of a capital nature and cannot be expensed to the P&L.MaxFromage said:
Chris Type R said:
Sorry in advance OP for intruding on your thread...
We're in a situation where we've borrowed against our main property to purchase a second property (we bought this to add the garden space to our main property).
In theory we own the second property outright - for those in the know, is there a mechanism whereby we could set up a Ltd for future rentals - if we go this way ? I expect it would require some financial gymnastics to accomplish - if at all possible. There's a not insignificant amount of money to be spent on renovation costs.
You could have a limited company to charge management fees, but it depends on your personal circumstances as to whether there's any point. Unlikely on one property. The rental income is yours and can't be moved to a ltd without the property moving too.We're in a situation where we've borrowed against our main property to purchase a second property (we bought this to add the garden space to our main property).
In theory we own the second property outright - for those in the know, is there a mechanism whereby we could set up a Ltd for future rentals - if we go this way ? I expect it would require some financial gymnastics to accomplish - if at all possible. There's a not insignificant amount of money to be spent on renovation costs.
What is the stamp duty situatuion for buying with a Ltd company I thought it was different?
Also whilst there maybe some adjustment in house prices it's unlikely there will be a "Crash" as the Gov effectively pre empted multiple reposessions by reforming support for Mortgage interest.
As crashes are generally fuelled by people being unable to support their monthly mortgage payments, if you reduce the incidence of payment failure you stop the inevitable crash, or at least kick the can so far down the road that you're no longer in goverment and it's no longer your problem.
Explained here in more detail:-
Also whilst there maybe some adjustment in house prices it's unlikely there will be a "Crash" as the Gov effectively pre empted multiple reposessions by reforming support for Mortgage interest.
As crashes are generally fuelled by people being unable to support their monthly mortgage payments, if you reduce the incidence of payment failure you stop the inevitable crash, or at least kick the can so far down the road that you're no longer in goverment and it's no longer your problem.
Explained here in more detail:-
21ATS said:
What is the stamp duty situatuion for buying with a Ltd company I thought it was different?
No, it is the same, although the 3% surcharge will always apply as it is not your main residence because it is being bought by the company.If you sell the second property already owned by yourself, you will also need to consider CGT as well regardless of who you sell it to.
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