Buying Commercial Property
Discussion
Advice needed please guys.
I am looking to purchase a warehouse to operate my business from. I had planned to keep the property seperate from the business, buying the property privately and then leasing it to my company.
However as the property purchase price is subject to vat I need to be vat registered to reclaim the vat on the purchase.
I am thinking that I would need to set up a another vat registered entity to puchase the property or is this over complicating things.
Any other thoughts/ideas much appreciated!
I am looking to purchase a warehouse to operate my business from. I had planned to keep the property seperate from the business, buying the property privately and then leasing it to my company.
However as the property purchase price is subject to vat I need to be vat registered to reclaim the vat on the purchase.
I am thinking that I would need to set up a another vat registered entity to puchase the property or is this over complicating things.
Any other thoughts/ideas much appreciated!
I would always advise a client to purchase the property seperately unless they have a particular requirement or desire to purchase it within the business.
There are a couple of options that you could consider. One would be to purchase it using a SIPP which would allow you certain tax benefits but it does mean that the deals when leasing the property tend to be a bit slower as you are dealing with 3 parties rather than keeping it simple.
Alternatively you could create a limited company as you suggest but it would be prudent for you to register it for VAT. If the property is elected for VAT you will don't need to be VAT registered but of course it means that will not be able to reclaim the VAT costs. Being VAT registered also means that you can then charge VAT on the rent you charge your company, but it will also mean that you have to charge VAT on the sale of the property should you choose to sell it. Bare in mind that stamp duty is payable on the total price INCLUDING VAT and this can make a significant difference to the transactional costs... Who said they can't tax a tax eh!?
If you wanted me to have a look at the details of it or anything then just let me know
my work email is tsc@hollishockley.co dot uk
There are a couple of options that you could consider. One would be to purchase it using a SIPP which would allow you certain tax benefits but it does mean that the deals when leasing the property tend to be a bit slower as you are dealing with 3 parties rather than keeping it simple.
Alternatively you could create a limited company as you suggest but it would be prudent for you to register it for VAT. If the property is elected for VAT you will don't need to be VAT registered but of course it means that will not be able to reclaim the VAT costs. Being VAT registered also means that you can then charge VAT on the rent you charge your company, but it will also mean that you have to charge VAT on the sale of the property should you choose to sell it. Bare in mind that stamp duty is payable on the total price INCLUDING VAT and this can make a significant difference to the transactional costs... Who said they can't tax a tax eh!?
If you wanted me to have a look at the details of it or anything then just let me know
my work email is tsc@hollishockley.co dot ukI have just concluded this property purchase.
It turned out that that the property was vat exempt which was a bonus as it saved paying stamp duty at 4% on the total incl. vat.
I have around £100k of development to complete on the property before we lease it to our ltd company.
Our accountant suggested we would have to register the property partnership for vat to enable us reclaim vat on the development costs. The downside of this is that the property will then be liable for vat if/when we sell it.
Now my question is how do we reclaim the vat on the modernisation/development work but still keep the property vat exempt?
Suggestions please!
It turned out that that the property was vat exempt which was a bonus as it saved paying stamp duty at 4% on the total incl. vat.
I have around £100k of development to complete on the property before we lease it to our ltd company.
Our accountant suggested we would have to register the property partnership for vat to enable us reclaim vat on the development costs. The downside of this is that the property will then be liable for vat if/when we sell it.
Now my question is how do we reclaim the vat on the modernisation/development work but still keep the property vat exempt?
Suggestions please!
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