The purchase of a property through a business can be very tricky:
There are numerous things to think about if deciding to do so, and therefore, 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 can refer you to our specialist tax partners for clarification and further advice, so don’t hesitate to get in touch.
More Blogs
Companies House Reforms – What is Coming Next?
As a follow on to our previous artilce entitled Companies House Identity Verification Rules Explained, this artciles looks to the future, and focuses on the additional changes proposed to be implemented in April 2028!
Does a Limited Company Need an Accountant?
This blog will explain whether a limited company in the UK is legally required to hire an accountant.
Companies House Identity Verification Rules Explained
For years, Companies House has largely operated as a passive registrar — accepting information at face value and relying on businesses to submit accurate records. However, in recent years this has been changing, and quickly! And at the centre of these reforms is mandatory identity verification.