Invest in ''buy to let'' property

Jawz

Good evening all,

A client, who is the sole Director of a profitable Ltd company is looking to invest in property and then rent it out.

My question is what is the best or most tax efficient route to go about this?

Is it:

A.To take a director's loan and buy the property as a sole trader.
B. To set up a subsidiary company and have his current ltd company as the parent company and buy the
property via the sub?
C. Any other tax efficient way that you can think of.

Many thanks in advance.

Jawz

Gem7321

If it's a commercial property then possibly in a SIPP? Would be worth speaking to an IFA on this though.

KernowAccountant

Jawz said:

Good evening all,

A client, who is the sole Director of a profitable Ltd company is looking to invest in property and then rent it out.

My question is what is the best or most tax efficient route to go about this?

Is it:

A.To take a director's loan and buy the property as a sole trader.
B. To set up a subsidiary company and have his current ltd company as the parent company and buy the
property via the sub?
C. Any other tax efficient way that you can think of.

Many thanks in advance.

Jawz

Without much more information this is virtually impossible to answer (without writing an essay).

Firstly, what do you mean by "tax efficient"? Income tax? Corporation tax? Inheritance tax? Capital gains tax? VAT? ATED? SDLT?

Is there a large credit balance on the DLA? If not, the company could be hammered with s.455 tax (if we're talking about a close company).

Would the property attract the ATED if held within a company?

Would the property prejudice the company's "wholly or mainly" trading status for ER or BPR purposes?

Is the director a shareholder in the company? Are there any other shareholders?

What other sources of income does the director have?

Considering all applicable taxes the list is endless. There is no "one size fits all" answer here - you've just got to look at the facts, do the computations and tick off the taxes.

Jawz

Thank you for your comments.

He is looking to invest in residential properties. sorry I did not specify.

He will be 48years old next year and basically looking to diversify by investing in properties.

A long term investment. The plan is to get that first property and if successful get the next one. The funds required is only for the deposit amount of say £20K maximum amount (mortgage), Property value of say £200k maximum. He is hoping to get it furnished and rent it out at a good rate, to be able to cover the monthly mortgage
repayments.

He is the sole director and the majority shareholder (90%). The only other shareholder is an employee of the company (10%) and will be part of the new investment as well with same shareholding arrangement as above.

Many thanks in advance.

paulstafford

Find an accountant who specializes in property tax.

Jawz

@ Toney what exactly are you trying to say by copying back the same question I posted? People are not here to mess about you know? If you want to fool around then please go to FaceBook or somewhere else. Thank you.