Buying an office

[Deleted member 160124]

I run a small Ltd company as a side business. Right now I run it from home but it would be nice to have a proper office for it at some point.

I know that the company could rent something relatively easily but I am wondering whether it might be an option to buy a property privately (using my private savings) and then let it back to the company. I think there could be tax advantages to this (the company could pay rent to me rather than paying me in dividends) and I would obviously have the property as an investment.

Has anybody here ever done something like this? Is this even sensible/feasible? Are small one-office commercial properties even sold separately, rather than as an entire building?

 

[WaveJumper]

Could be done through a pension fund you set up, this can then invest in commercial property, speak to a tax / financial adviser

 

[Financial-Modeller]

As @WaveJumper suggests, it can be highly tax-efficient to do this via a SIPP, if you are unlikely to need to sell the property and spend the cash prior to retirement.

Buying personally, you are exchanging reduced Corpration Tax from rent payments, for increased income tax on your personal rental income.

Alternatively, your company can make contributions to your pension fund, which then (with a mortgage if necessary) buys the office. Your company rents the office from your pension fund and depending on the lease, would usually be responsible for maintaining the office premises. Office accommodation costs are deducted from company profits prior to calculating Corporation Tax, and rental income and any equity growth grow on a compound basis in your tax-free pension.

 

[RodionGud]

Start with speaking to your financial adviser