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
Cash Flow Management for Your Self Employed Business: Tips and Strategies
Cash flow management revolves around regulating the funds entering and leaving your business. This supervision allows you to maintain a healthy balance, ensuring your business can cover its operational costs and future investments. As a self-employed business owner, mastering cash flow management is critical for your venture’s longevity and profitability.
Property Accounting Errors: Common Mistakes by Property Investors and How to Prevent Them
The success of property investment can hinge on many factors, and one that often gets overlooked is the crucial role of accurate property accounting. Missteps in this area can lead to serious financial and legal implications. This blog post explores common property accounting errors that property investors make and offers practical advice on how to prevent them.
The Importance of Regular Financial Health Checks for Property Investments
Financial health checks for property investments are integral. Like any financial endeavour, property investments require meticulous management for fruitful returns. A core aspect of this management is these regular checks. This blog delves into the significance of such assessments and how they can bolster your property investment success.