Investing Ltd Co funds in BTL

Investing Ltd Co funds in BTL

7:59 AM, 4th November 2014, About 9 years ago 6

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I currently own 2 BTL properties which I let out as a private landlord. I also have a consultancy business which is run as a limited company. I am considering purchasing an additional property via the LTD Co as I have a surplus of cash in the company that is not currently earning much interest etc. Investing Ltd Co funds in BTL

Any advice on this gratefully received.


Paul Dover

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Mark Alexander - Founder of Property118

8:08 AM, 4th November 2014, About 9 years ago

Hi Paul

I can only assume that your reason for wanting to buy in the company name is so that you don't pay tax on the money you take out of the company?

That's fine if you want to buy the property for cash but if you want to obtain a BTL mortgage then you will find that difficult because most lenders will not lend to limited companies unless they are single purpose vehicles, i.e. companies created for the sole purpose of owning and letting property. You may be able to create a wholly owned subsidiary but this will incur initial and ongoing accountancy costs and you will still be limited to the number of lenders you can approach.

If you do buy in a limited company then you will not be able to use your personal CGT allowances on sale. You will also need to provide personal guarantees on lending. The company will not die when you do so the CGT write of on death will not apply. Any profits made by the company will be taxed at the lower company rates but you may still have the same problems regarding tax when you look to get the money for your personal use.

In short, you need to take a holistic view of what you are trying to achieve long term as opposed to merely focussing on what appears to be a short term tax complication.

For details of the consultancy service I provide please see >>>

Colin Dartnell

8:37 AM, 5th November 2014, About 9 years ago

Whenever I spoke to my accountants about buying through a limited company they always said no, stay as I am as a private landlord.

Just bite the bullet pay yourself a good dividend and buy privately.

PWD 64

10:44 AM, 6th November 2014, About 9 years ago

Reply to the comment left by "Mark Alexander" at "04/11/2014 - 08:08":

Thanks for the advice Mark. You are correct in that I am simply looking for a cash investment as I have no intention of removing the money from the company in the short term. There would be no financing requirements and no intention of building a portfolio within the company etc. My question is therefore simply is anyone aware of any legal/tax pitfalls of managing a BTL through a Ltd Co that I need to consider?

Mark Alexander - Founder of Property118

11:07 AM, 6th November 2014, About 9 years ago

Reply to the comment left by "PWD 64" at "06/11/2014 - 10:44":

I think the reasons I've stated above are relatively compelling regardless of the fact that you don't need finance. The only upside of doing what you are considering that I am aware of is short term tax implications. However, clearly this is a long term investment so long term implications must be factored into your decision too.

Neal Craven

18:59 PM, 8th November 2014, About 9 years ago

Have you considered a commercial investment in a pension, could that be funded by the company

Mark Alexander - Founder of Property118

21:05 PM, 8th November 2014, About 9 years ago

Reply to the comment left by "Neal Craven" at "08/11/2014 - 18:59":

Great suggestion, get tax relief on investing the cash into the pension and then let the investment grow in a tax free environment

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