Buying property limited company then transferring personally

[Triotrex]

If a limited company buys a commercial property for example 300k. There’s only 1 director. And if the director wanted to transfer the property to his own personal name after 10 years . What would be the consequences? Can I simply transfer it over the name ? Also for buying the property if I paid a deposit of around 60k would this counted as an expense in the limited company and tax deductible ?

 

[TheCyclingProgrammer]

How much will the Director be paying the company for the property?

If the answer is "nothing", then the answer to your question is: most likely a very hefty tax bill.

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim21640

 

[Triotrex]

so basically all these people who have like 10 BTL properties are wasting their time as the property is never theirs?

 

[DontAsk]

Why do you think they are wasting their time?

 

[Triotrex]

Why do you think they are wasting their time?

If you ain’t got helpful advice don’t post here mate. Go to the pub for chit chat and to make freinds

 

[Mr D]

so basically all these people who have like 10 BTL properties are wasting their time as the property is never theirs?

You can consider it wasting their time. Perhaps to you it would be.
Perhaps they looked into the advantages to them and found the advantages to be worth it.

Is ownership of the property more important to you than ownership of the business with considerable assets would be to them?

 

[Triotrex]

You can consider it wasting their time. Perhaps to you it would be.
Perhaps they looked into the advantages to them and found the advantages to be worth it.

Is ownership of the property more important to you than ownership of the business with considerable assets would be to them?

Does this answer my question . Only post if you have a answer now go drink a pint

 

[Scalloway]

Also for buying the property if I paid a deposit of around 60k would this counted as an expense in the limited company and tax deductible ?

No it is not tax deducible expense. It is the purchase of an asset.

 

[Mr D]

Does this answer my question . Only post if you have a answer now go drink a pint

It answered that post.

You want some answers then perhaps a little politeness can help you. Now I'll delete the full answer to your initial post I was about to post. You don't appear to want anyone replying.
Not my problem I'll grab a pint of whiskey now.

 

[GillespieBS]

The shareholders own the company so they are still doing relatively well. If the company then decides to sell the property to the director, the company will make a tidy sum (capital gain) and pay tax on this gain. Again the shareholders will now own the cash instead and will have made a profit.

The director however has now paid quite a bit of stamp duty to buy the property and might be wondering if it was worth it. He has lots of cash in a company and will have to pay tax if he takes it out.

 

[TheCyclingProgrammer]

Does this answer my question . Only post if you have a answer now go drink a pint

As you’re new here, if you want advice perhaps you could learn some manners and treat other members with a bit of respect. Failing that, maybe you could go and get some advice from your mates down the pub instead.

 

[Newchodge]

No you can't. Mine's a Laphroaig.

In case you had not noticed this is not a site where you get free comprehensive legal advice, This is a forum where the members treat each other, mostly, with respect. You might try doing the same, you may then get some useful answers.

 

[Triotrex]

...

 

[Triotrex]

The shareholders own the company so they are still doing relatively well. If the company then decides to sell the property to the director, the company will make a tidy sum (capital gain) and pay tax on this gain. Again the shareholders will now own the cash instead and will have made a profit.

The director however has now paid quite a bit of stamp duty to buy the property and might be wondering if it was worth it. He has lots of cash in a company and will have to pay tax if he takes it out.

So the director has to rebuy the property even thought he is the only director ? What if he doesn’t have that amount of money personally? Is it best to just buy it in your personal name then ?

 

[mattk]

So the director has to rebuy the property even thought he is the only director ? What if he doesn’t have that amount of money personally? Is it best to just buy it in your personal name then ?

The director only needs to "rebuy" the property if they want to own it personally. As you said, in that instance it would make more sense to simply buy it in their own name in the first place.

If a company does own the property and the director wants to cash out, the company would sell the property on the open market and the profits would be paid to the director as a dividend.

 

[Triotrex]

The director only needs to "rebuy" the property if they want to own it personally. As you said, in that instance it would make more sense to simply buy it in their own name in the first place.

If a company does own the property and the director wants to cash out, the company would sell the property on the open market and the profits would be paid to the director as a dividend.

Thanks . Also 1 more question the reason why I’m thinking of buying it through the limited company is for example the 50k deposit I put down for the property would that 50k be a tax deductible expense so I save 20% tax on 50k? On the other hand if I bought it personally I would have to remove 50k from the company pay tax on that then it but it personally. Can I use the deposit as a expense?

 

[Scalloway]

Can I use the deposit as a expense?

NO!

 

[Triotrex]

NO!

Can you elaborate like mattk does on his reply’s?

 

[Scalloway]

Money you spend on assets such as buildings is capital. Something that will be in existence fore a number of years. If you buy a building you will almost certainly get your money back when you dispose of it.

Tax deductible expenses are consumed within a short time and you have nothing tangible left at the end of your financial year. For example electricity, stationery, accountants fees, cleaning materials.

 

[Triotrex]

Money you spend on assets such as buildings is capital. Something that will be in existence fore a number of years. If you buy a building you will almost certainly get your money back when you dispose of it.

Tax deductible expenses are consumed within a short time and you have nothing tangible left at the end of your financial year. For example electricity, stationery, accountants fees, cleaning materials.

So can I deprecated the building? Over the years ?

 

[Scalloway]

You can depreciate the building if you think it will lose value over the years. There is no tax allowance available though. You will either get a taxable capital gain or a capital loss when you sell the building.

 

[Triotrex]

You can depreciate the building if you think it will lose value over the years. There is no tax allowance available though. You will either get a taxable capital gain or a capital loss when you sell the building.

Oh right. So are they any tax advantages buying through limited company. In that case it’s better to remove the 50k pay tax on that then buy the property personally is that correct?

 

[pentel]

Lots of different things to consider here. Is this a trading company? is it an investment company? Is it a buy to let company? Each have different rules and tax implications.

I would suggest you investigate the full implications of what you are considering with an accountant.

Income tax, NI, dividend tax, stamp duty, entrepreneurs relief, inheritance tax and may other taxes come to mind. Other things to consider include the legal separation of the asset from either yourself personally or your company. There is also the possibility of using pension planning in this situation.

Definitely a case for paid foe advice.

 

[mattk]

Oh right. So are they any tax advantages buying through limited company. In that case it’s better to remove the 50k pay tax on that then buy the property personally is that correct?

My understanding is that the main advantage is mortgage interest is tax deductible for a limited company, but for individuals this is being tapered out.

 

[Newchodge]

Definitely a case for paid foe advice.

I love the concept, but you'd be better paying someone on your own side

 

[Triotrex]

Lots of different things to consider here. Is this a trading company? is it an investment company? Is it a buy to let company? Each have different rules and tax implications.

I would suggest you investigate the full implications of what you are considering with an accountant.

Income tax, NI, dividend tax, stamp duty, entrepreneurs relief, inheritance tax and may other taxes come to mind. Other things to consider include the legal separation of the asset from either yourself personally or your company. There is also the possibility of using pension planning in this situation.

Definitely a case for paid foe advice.

Right ok. So mainly the only advantage is you can deduct the mortgage interest as expense. No other advantages such as deposit as expense and can’t depreciate ?

 

[Adam93]

The best advice one can give here, is to invest some of your deposit in professional advice. There is a lot of money at stake.

The change in the way mortgage interest relief works may not even impact you. You need tailored advice, there is no 'one size fits all' in the scenario.

 

[Triotrex]

You can depreciate the building if you think it will lose value over the years. There is no tax allowance available though. You will either get a taxable capital gain or a capital loss when you sell the building.

Also for example the 50k used from the company if used to buy the property - I’d still pay corporation tax on that 50k even thought it’s used from the limited company bank account

 

[TheCyclingProgrammer]

Also for example the 50k used from the company if used to buy the property - I’d still pay corporation tax on that 50k even thought it’s used from the limited company bank account

That depends on the source of the £50k in the first place. If it's profits from trading or other investment activities, then yes. If it's capital introduced or a director's loan, then no.