Buy to let property through a Limited Company

[Brsln2]

Hi

I was wondering whether it is possible to buy a buy to let property in my personal name but have my limited company deal with income & expenditure side.

In other words, can I own the property but let the company have the income and expenditure related to it. And I believe the company wouldn't be able to claim the interest expense as the mortgage won't be in the company name but personally on my name.

Thanks for your help.

Baz

 

[Mike Conroy]

who is actually buying the property you or the company. you must remember you and the company are totally seperate. if you are buying the property no you cannot record the income in the company accounts. If the company is buying the property then you must record the income in the company accounts.

 

[MikeJ]

Couldn't he set up a property management company that charges a high % of the rent income as a fee?

(why do you want to do this, out of interest?)

 

[Brsln2]

Thanks Mike. It was me buying the property and I was wondering whether I could deal with the taxes through my limited company without company owning the property.

I thought I couldn't. Thank you.

 

[Brsln2]

I wanted to do this because I know lenders will not give good rates for my company.

 

[David Griffiths]

It's possible to rent the property to the company for an amount equal to or above the monthly mortgage interest. The company will sublet to the end tenant, and claim relief for expenses such as repairs, insurance and rent paid

The OP will receive rent from the company and claim relief for the mortgage interst paid.

This is best done by an agreement in writing before the event. Note that the mortgage interest might be less than the gross mortgage payment for a repayment mortgage. Note also that it's essential that the insurance policy is in the correct name and that the insurance company is fully aware of the arrangement.

There's a possibility that HMRC might claim that the rent is not an arm's length value but they would normally be concerned that the rent is too high, not that it's too low

Edit - not sure that the lenders need to be informed as well, but if its a BTL mortgage then presumably it doesn't matter who the tenant is

 

[Brsln2]

Dear David

Thank you very much for your thorough explanation and time. Much appreciated.

 

[Mike Conroy]

good point David. however, i can see problems with HMRC and the insurance company this is without the mortage lender as you would have to be up front with them.

 

[David Griffiths]

It wasn't something that we set up, more force of circumstances, but I actually have a client who does this. HMRC were fully informed, in relation to corporation tax, when the accounts were submitted and didn't raise any query. The insurance issue is no different from selling a personal car to the company - just be clear as to the insurable party

 

[Mike Conroy]

I am glad you have have come across this situation David, to the OP take Davids advice

 

[UKSBD]

I'm in a similar situation but are thinking of letting out my property as a holiday home.

The home belongs to me, but could I rent it to my company at the going monthly rentable value and then the company rent it out at holiday home rates?

For example I rent it to my Company for £900 a month, the company then does all marketing, has all the expenses and potentially charges £700 a week.

Advantages I see in this is I personally get 12 months guaranteed rent and the company takes the risk and pays all the marketing and running expenses.

If this does sound like a sensible option, would I be better off forming a new company solely for this so as to stay under the VAT threshold?

Are these questions a general accountant can advise on or would I need specialist advice?