Shall I form a Private Limited Company, if so, how

aliciazh · Jun 2, 2009

Hi, I am going to purchase a flat in UK with a friend who is in an European country. I am renting at the moment, but if we have the flat, I will be living in one room, and let out the other room. In this case, shall I form a private ltd company, and use the company to purchase the flat, so that in the future, if anyone buy over the other part, stamp duty can be avoid? And it wouldn't effect my personal finance either in the future? Thanks

DIY Accounting · Jun 2, 2009

Definately not a case for forming a limited company. Too much admin, responsibilities and any profit would be taxable while capital gains on your main home is not subject to capital gains.

aliciazh · Jun 2, 2009

Hi Terry, thanks for your reply =) We will not use this property as main home, it will be totally in the letting market after few years' time. If it is owned by a company, aren't VATs on all expenses can be claimed back every year?

Maslins · Jun 2, 2009

Not that simple I'm afraid. Residential rental income is exempt from VAT so you would never be able to reclaim any VAT regardless of whether you held the property in your own name or under a Ltd Company.

Also, chances are you'll pay lower capital gains tax on eventual sale if you hold it personally rather than via a Ltd Co.

In short, don't form a Ltd Co for this, it's highly unlikely to work out in your favour.

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Shall I form a Private Limited Company, if so, how

aliciazh

DIY Accounting

aliciazh

Maslins

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