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Hello

I have set-up a company but for other reasons

If you are not taknig money out of the business but reinvesting and reinvesting then you only pay 19% p/a rather than my highest tax band rate.  When you consider most cost in this business ie. solicitor, valuation, survey (for the purchase) and deposit which makes up 80-90% of expenses, can't be put against income tax it makes a big difference. So it reducing my tax liability by more than half.

The other thing is I went to see a Tax Lawyer, Tuesday of last week and he said it very easy and legally get money out at 2.6% income tax but it is only worth doing if you are making more than £50,000 p/a per person (Which is LESS THAN 50 properties which is not really a large amount).

The limited liability is not really available as MX ask for a guarantor (sp?) for their company mortgages.

Does any other company offer mortgages to companies without it?

There is also IHT advantage but that is along way off. (HOPE)

Paul

Pod, 

OK, I will elaborate on point 2, the fact that limited company can be converted to a REIT and can then be free from Corporation Tax and Capital Gains Tax. I quote from Personal Finance and Savings:

"One of the most attractive aspects of the Government’s new investment instrument, Real Estate Investment Trusts (REITs), are the numerous tax advantages on offer. Created to encourage private investment in real estate, REITs are extremely tax-efficient as they are free from Capital Gains Tax and Corporation Tax...". You can read the whole article here.

Perhaps, Pod, you can explain how these advantages can be gained by someone who purchases properties in his own name. I would be especially interested to hear how you can avoid paying Capital Gains Tax when you own investment property directly.

I am aware that converting to a REIT is not costless exercise, but it is almost certain that in future all that will be required is a listing on AIM, which is, surely, relatively cheap compared to paying CGT on the gain on, say, a portfolio of 50 properties held for a decade.

My post was never intended to be construed as giving advice, certainly not tax advice. Half my points are nothing to do with tax anyway.

You really need to start your business by seeing an accountant; I can refer a good one if you like.

My accountant basically advised that if you intend to purchase property and hold on to it for long term it is best to purchase it in your own name as there are greater tax breaks. If however you intend to purchase property and trade it on, then apparently it is better to purchase in a limited company as the trading would attract corporation tax as opposed to capital gains tax.

As I said, best see an accountant, but if you need a mortgage or bridging just let me know.

Regards

Steve Hemingway:

Pod, OK, I will elaborate on point 2, the fact that limited company can be converted to a REIT and can then be free from Corporation Tax and Capital Gains Tax. I quote from Personal Finance and Savings:"One of the most attractive aspects of the Government’s new investment instrument, Real Estate Investment Trusts (REITs), are the numerous tax advantages on offer. Created to encourage private investment in real estate, REITs are extremely tax-efficient as they are free from Capital Gains Tax and Corporation Tax...". You can read the whole article here.Perhaps, Pod, you can explain how these advantages can be gained by someone who purchases properties in his own name. I would be especially interested to hear how you can avoid paying Capital Gains Tax when you own investment property directly.I am aware that converting to a REIT is not costless exercise, but it is almost certain that in future all that will be required is a listing on AIM, which is, surely, relatively cheap compared to paying CGT on the gain on, say, a portfolio of 50 properties held for a decade. My post was never intended to be construed as giving advice, certainly not tax advice. Half my points are nothing to do with tax anyway.

loadsofmoney,

Do you have a email address of contact number I can contact you on? MX will only do a same day remortage with me once I've been in the country for at least 3 years. I've been here for + - a year and a half....its a shame as I have a 5 year work permit which eventually entitles me to obtain citizenship (which I do plan to do). Would you be able to help? (I know there are only 2 lenders that are doing same day remortgages?)

 Up until I have been trying to come up with creative ways to do BMV deals without same days. One option (the best one so far) is to simply JV, I source and agree the deal and give 50% of the profits away purely to buy and sell the property in someone elses name. This would work for trading only.

For BTL's (rent backs) I could buy the property straight out based on purchase price (lenders will do this with me and lend me 85%-90% LTV of purchase price). I could borrow the deposit (10-15%) at 2% per month from a private investor, then 6 months down the line remortage the property and use the released equity to pay the investor back. According to me there are risks here like, I don't know how much lenders will remortgage the property for 6 months down the line, and hence don't know whether I will be able to pay this investor back. Ideally I would need to get some sort of remortage in place. I have heard its possible to just get 2 valuations done, one based on purchase price, and one based on market value, get an initial mortage based on the purchase price, then 6 months later get the second valuation retyped (assuming the mortage offer lasts 6 months).

As you can see I'm looking for solutions here.

Could you help in any way?

Cheers
Dale

Hi

Our contact details can be found by clicking on the website link which appears on my signature block.

I will have a think about your situation and come back to you.

Regards

Steve Hemingway:

I fail to see how permanent private residence relief may be used to reduce CGT on a BTL investment. Surely the whole point about BTL is that you don't live there yourself.

I think you fail to see a lot more than that ... i'm still chuckling that someone thinks an AIM-listing is an appropriate tax-mitigation strategy for a BTL landlord.

what is "permanent" PPR?  there is "PPR" ... and that's it.

PPR relief is one of the reliefs that may be used to mitigate CGT.  if you have never lived in the property, then, of course, it isn't possible to claim it.

however, taper relief, clever timing of sales, use of annual exemptions, have a massive impact on CGT bills ... if the property is held personally, and not within a company.

people like you are dangerous on forums like this ... because others will read your nonsensical pseudo-advice, and assume that it's correct ... when, clearly in this case, it is very far from being correct.

why not stick to topics you know something about?