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  • Buy-to-Let

    Transfer into Limited Co. to free funds

    Hi everyone

    I'm a new Investor and have set up a Ltd Co. with my partner and her brother to build a portfolio (all Directors with even shares)

    I currently own a flat with no mortgage (valued at £110k) and have been trying to sell this and use the funds to put in to the company as my initial start-up cash (£50k), pay £50k to my partner for a share in our house, and pay off £10k worth of various debts.

    However over the last year 2 sales have fallen through so I’m are now thinking  of changing tact and holding on to it for the time being. The numbers add up so it would return about 5% ROI, not fantastic, but acceptable for the time being and sell in a few years. As far as I can tell we have two options-

    • Put on a BTL mortgage myself and release around £80k (25%) equity and put less in to the company.
    • Sell it to the limited company as if selling to a third party.

     I have a couple of questions which I can’t find clear guidance on-

    We paid the 2nd home stamp duty when we bought our home which was an extra £12k, could this still be claimed back even though I own 33% (and my partner 33%) of the Ltd Co?

    And

    Would there be any benefits (except the cheaper interest rates, cost of sale etc.) of keeping it to myself? I’m keen to put as much in to the company as possible if I can.

    Thanks

    James

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    I would refinance and release the equity to buy more property. I'm still looking into limited company stuff as I'm thinking of doing that so can't comment on that at the moment.

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    If you are planning to build a portfolio then a Ltd company seems to be the way to go. Selling your existing property to your company will incur some fees that you need to factor in.  Refinancing to release equity to buy a property using your Ltd company is one option.  Be aware that running a Ltd company brings with it Accountants fees, Companies House fees etc., and corporation tax on profit (which can be reduced by salary costs although if in excess of particular bands then results in having to incur National Insurance costs).

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    What is this obsession with using limited companies to hold BTLs and the like; we've completely debunked the incorporation myth on numerous occasions on PT, as it's the worst possible way to do it.

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    Tony Gimple

    Founding Director

    Less Tax For Landlords

    0203 735 2940

    You haven't debunked it at all. A company can be a good way to go, though in some circumstances it can be a bad choice.

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    Keep it personal don’t go the ltd co route

    keep on the personal route as long as you can and then if only then you have taken taxation’ advice maybe go to company startergy


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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.

    I still don't get this argument. If you already have an income of £50K or expect to in the foreseeable future then a company makes perfect sense, especially if you want to use the property company income to pay into a SIPP.

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    I agree with your view once you have taken BTL to an income of 50k

    move then into a company

    that makes sense

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.