Purchase of a property through a Limited Company
The purchase of a property through a business can be very tricky and there are numerous things to think about if deciding to do so. Specialist advice is recommended.
If you decide to purchase a home through a Limited Company, the house ultimately belongs to the company and not you personally. Therefore, the house will be looked upon as an investment property.
If you decide that you would like to own the home personally, you would have to purchase the house from your company for at least fair market value, as anything under fair market value would be treated as a taxable benefit.
If you sell the property, any profit goes to the company and will have to be paid out as dividends. If you purchase a home through your company and you live in the house rent free, or not at market rate, provision of accommodation will be treated as a taxable benefit.
A crucial point to note is that as the house will belong to the Limited Company if, for example, you ever get sued, the house will not be safe.
Disposal of the property could lead to capital gains tax and unlike if you own the property personally, there is no tax free annual allowance for the company for capital gains tax purposes.
As you can see, there are a lot of factors to think about when purchasing a home through a Limited Company. Should you require any additional information, or are considering this we FW Accounting can refer you to our specialist tax partners for clarification and further advice.