Currently living in a 2 bed flat with approx £65k left on the mortgage. We have seen a house that we like that has no chain.

Ive had a good couple of years with the business and have built up the cash reserves.

Now, my question is, if my ltd company bought my current property as an investment at the market value (im not looking to do any tax dodges etc by paying over the odds for it), can i transport my mortgage over to a new property ( and use the equity and take dividends to cover the difference in value) . Again not looking to do anything dodgy , ill pay personal tax on the dividends etc.

I can then rent the flat out through the ltd company and sell it at a later date.

Separate legal entity, I can’t imagine it’s as easy as “transferring”.

In my experience no mortgage company will give a mortgage to any Ltd that is not a special purpose vehicle (other then specific lettings businesses) . IE. You need a Ltd co set up to buy this house, and only buy this house, so your existing Ltd will not work.
Other than that, as long as your exisiting mort is transportable, then yeah no issue.

Yes you can. Your company would buy the house and have to pay stamp duty on the purchase as you dont get the tax free benefit you get as an individual. Your company would need a mortgage for a Ltd company if it needed to borrow to complete the purchase. The company can claim the mortgage repayments as a company expense. You should then be able to transfer the personal mortgage to your new home. Legally you and your company are totally separate entities.

I heard on one of the finance podcasts that it was really difficult for a company to get finance to buy a property.  It may have been r4 moneybox.  Isn’t a cooperative exempt from sdlt, I think it’s the only loophole left.  Also, when in company ownership is it not subject to cgt at a higher rate, again it was covered on the podcast, maybe it was the property podcast with the 2 Ron’s.

Sorry it’s a bit vague i only really listen and take note when it concerns me.

Houses are expensive.HMRC can be awkward. Go consult an accountant who can give you the right advice.

As I understand it the company can buy property. This would normally be commercial but if you have enough spare cash to buy the place outright with the business then there is probably nothing stopping you. You would incur normal taxes and duties on the purchase. These can be offset against tax.

edit: unless you are a rental/property management company

as you are a different entity to the company they would then sell the house to you (paying any tax on the gain) and you would pay the stamp duty as an individual.

If you live in the house while it is owned by the company you would probably need to pay market rate rent or declare this as a benefit in kind if you spin it as housing provided as part of your contract.

I’ve bought 5 properties through my ltd company, Natwest part financed it with a business loan (decent rate).

Its slightly more expensive than a normal mortgage but we get ltd company mortgages all the time, but only for special purpose companies that are solely to buy a single property.

Mine isn’t a special purpose company, and the core business is pretty far removed from property investment. I might have just got lucky with the business relationship manager assigned to me though I suppose.

The limited company wouldn’t  need any financial assistance to purchase the flat so that is the simple bit.

I just wasn’t sure if it was frowned upon if my Ltd company bought my property, but it sounds like that’s ok .

I could use the money to pay off the existing mortgage, then use the equity as a deposit on the new house and get a new mortgage . All this would be done privately and not as part of the business.  I didn’t know if you could put your mortgage on “retention” , then transfer it to the new place. I guess I should talk to a mortgage advisor on that as the LTV will be far smaller on the new property, and it may pay to have a new mortgage anyway.

The plan is to have the flat owned outright and payed for by the Ltd company , and for us to have a new house with just a £65k mortgage

All this would be done privately and not as part of the business.

This phrase might raise an eyebrow with HMRC. Effectively I guess you need to think of yourself and the business as two separate entities.

So the same way you would if someone else was buying the flat. Buyer and seller have different solicitors etc. You move out on legally agreed dates etc.

Just so you can demonstrate you are not moving business money to yourself without paying tax/NI etc. or buying yourself a personal house/car etc but claiming it as a business expense.

I’d be surprised ( but interested to hear) if your own ltd co could buy your existing property, as that sounds to be like a vehicle for extracting a lot of cash from your firm without paying any tax on it.

A bit like if my wife worked for my company, then I made her redundant and gave her a large redundancy payout, this is frowned upon by HMRC.

You can’t transfer a mortgage between properties I don’t think.

I’ve sold 2 personally owned properties to my company. If the company hasn’t got the cash there and then, you can register a legal charge against the company for the outstanding balance then the company can repay you in stages.

’ve sold 2 personally owned properties to my company. If the company hasn’t got the cash there and then, you can register a legal charge against the company for the outstanding balance then the company can repay you in stages.

Interesting…

I’d be surprised ( but interested to hear) if your own ltd co could buy your existing property, as that sounds to be like a vehicle for extracting a lot of cash from your firm without paying any tax on it.

I would agree with you if I were staying in the property or paying over the odds for it.

Ok, it would reduce my corporation tax on the initial purchase, but any rent , money from selling it later on would be subject to taxes etc. The property would be nothing to do with me, other than I am the director of the company that owns it.  I could leave £100k in the business account that is earning bugger all interest for the company , alternatively it could be making £6-7k in rent for the Ltd company.

https://www.gov.uk/government/publications/legal-charges-registration-ch1o

As long as stamp duty is paid, the sale is at market value there’s no reason why not I believe.

Certainly my solicitor and bank had no issues with it.

Here’s my solicitor if you want further advice:

https://www.hillyermckeown.co.uk/staff/ian-millington/

The limited company wouldn’t need any financial assistance to purchase the flat so that is the simple bit.

Then I wouldn’t. Take what you need for the new one in dividends and keep the old one as is. Maybe stagger dividends (end of tax year not that far, big lump in March and again in April, maybe take some as a loan from company to you to repay out of future dividends, is Mrs1972 a shareholder? speak to a tax adviser) My reasoning is that if your company owns the property it won’t benefit from an CGT allowance when it sells like you would if owned personally.

And when the company sells it and you take the money the money out of the company you’ll pay tax on the dividends anyway.

No she’s not at the moment. Plan to get her on the books soon.

I’ll be booking a meeting with my accountant soon methinks

You wont get any personal cgt relief anyway if you let it out, I think the torys just shut that door.

No big rush, but I would suggest before the end of March, espcially if she’s a lower rate tax-payer.

.

[EDIT] Been working in industry too long, out of touch.

Odd that no-one ever mentions stuff like that when they go on about ‘tax cuts for the wealthy’. The 50p/45p thing caused a massive fuss, changes to dividends (2015? 2016?) and CGT which do hit the wealthy hardly mentioned at all.

Be careful with the wife bit. I did a bit of reading about this when they switched to “first £5k dividend free” etc. All the advice said don’t do it, HMRC will be all over you.

My wife is doing a few hours for the company (has another full time job) but these will gradually increase as we approach retirement.

We’ll then both earn lower rate max through the company, I’ll take dividends.

Should be OK making her a shareholder? (watch things like A and B shares as obvious tax dodge though) Are you thinking of having her on the payroll without actually doing anything? They will question that

No, she can take care of all the admin work.

Free me up to watch homes under the hammer 😂😂

By the time youve had legal fees on the sale and purchase of the property, been hammered for the sdlt plus the second home surcharge, will you have achieved anything? Youve also got to repay your mortgage and take out a new one, may cost more money in fees.

I cant see much of a benefit in your situation, a 100k property is going to cost thick end of 10k to move and for no real gain, assuming the cash reserves are high because youre already drawing at the maximum tax effecient levels then OK corporation tax on the rent is lower than income but youve still got to extract the money somehow and youll be hit there unless you can plan that efficiently.

Speculative but id worry about tax changes too, I can see govt swinging the axe a bit more on this kind of thing, you wouldnt get an exemption from ATED if its just on the books of an unrelated business so if they drop that threshold could be another layer of cost to bear.

Decent accountant time by sounds of it.

as that sounds to be like a vehicle for extracting a lot of cash from your firm without paying any tax on it.

confusing cash with value.  asset value of the business is the same before and after.