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What are your thoughts about using a property service company to manage property expenditure for properties which are held in our personal names? We decided not to move our few properties into the company due to high cost of stamp duty and issues with inheritance tax further down the line. Now we have a company which is not trading. We just got a new property that needs renovating. I'm wondering if now is a good time to use the company to service the properties and charge myself & husband 10% service charge. This reduces our income to just below the higher tax thresholds. Also I can use the company for purchasing e.g. kitchens and getting trade prices so saving money there too. Is this a legitimate company purpose? Or would it be considered tax avoiding? Is there a minimum number of properties we need and would we need to service properties belonging to third parties for this to be considered legit? I don't have a job so rental is my only income and I'm spending quite a bit of time on the properties especially with the new renovation.
I asked this question a few weeks ago for similar reasons. Maybe easier to check out the previous thread ?
OK thanks Andy will have a look at that.
I was advised if you go down this route it would be better if you were doing third party work ie manage property other than your own
you may wish to check this point out with a Tax advisor
Learn Change and Adapt ?????
Here is the previous thread on this topic:Managing own Property via a Limited Company
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
I've worked out the tax situation and the saving is not really worth it unless I can do other things with the company. Just wondering if there is anything I can do with refurbishing my latest acquisition via the company. Anyone have any thoughts?
you need few good reasons to run a company
just avoiding S24 is not enough good reason
I have quite a large business and I have done it for a number of good reasons
Succession as I age
I am looking winding down my own personal time to the business and I will need to hand over the company to my son and his children
I do avoid a lot of S24 but that's just made me to look carefully at what I wanted to achieve after I am gone
And it fits great with my plans
I am not sure for new comers to the world of BTL a company formation will be the best way of buying investment property its very restrictive and one way or another more tax will be due
A company works well to hold investment property if you don't want an income and you funding a pension
But if you do it to have an income and leave your 9 tiil 5 job its not great
DL seems to be talking about a company owning property which Annie said she rejected in the OP.
I agree with DL that a company is good for building a pension. I also think that using a company to hold a few properties can work, though that is getting harder. If you have some dividend allowance unused you can pay yourself a dividend paying only corporation tax. Of course Hammond intended to reduce the allowance from £5k to £2k and that may still happen. If you don't have a salary from another job the company can pay one of up to ~£8k with you only paying income tax on it. So it seems likely there would be a tax saving from using a company to hold properties with rental profits up to a total of about £10k. There are extra costs from using a company, and transferring properties you already own probably would not be worth it. But if you would be affected by S24 it may well be worth it.