Can I buy property through my Limited Company?
It is possible to buy property through your Limited Company; however there are many things to be aware of and consider before taking this step which we will now review.
To start with, it is not recommend buying your first property via your Limited Company. This is because in doing so you would incur a benefit in kind, unless you paid the commercial rent to your company. You will also incur Corporation Tax at the point of selling the property.
When deciding whether to buy through your Limited Company there are certain factors to consider and many will depend on your personal circumstances. To be sure of your decision it is recommended that you sort advice from your accountant.
To help determine whether buying property through your Limited Company is right for you, we take a look at questions received from some of our Contractors:
Is it tax efficient to buy property through my Limited Company?
Buying a second property through your company involves some tax considerations. Corporation tax at the rate of 20% is payable for any rent received and profit made on the sale of your property. Another point to consider is whether you are registered on the flat rate VAT scheme. If so, this will mean that any rental income you receive will amount to turnover for VAT purposes and you will be required to pay part of this to HMRC every quarter.
What impact is there on tax when buying a property in my own name?
For any rent received you will be taxed using up some of your tax band. This means you will have less availability for basic rate dividends.
Would I be subject to Capital Gains Tax?
Capital Gains Tax is payable when your property is sold at either 18% (basic rate) or 28% (higher rate).
Are there any risks of buying through a Limited Company?
The property is owned by the company and is classed as an asset of the business. There are potential risks to your property should your Limited Company experience any financial or legal difficultly.
How do I secure a mortgage?
A personal guarantee from a director may be required to secure a mortgage. If so, you will need to be aware that it takes you out of the limited liability protection of your own personal assets.
This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.