8:36 AM, 13th November 2016, About 5 years ago 3
As a Property118 Founder Member I took advantage of a free 15 minute consultation with Mr Mark Smith of Cotswold Barristers (The chap who extracted 27.5 million GBPs from the West Bromwich Building Society)
I began by asking him, in view of my circumstances , whether it was worth me incorporating my Buy to Let portfolio and to give me me an idea of costs should it be worthwhile. Mark confirmed that my own strategy was sound and benefits of incorporation in my case are marginal. There the matter rests and I am confident that I am taking action based on the finest advice available.:-) ( A pretty good feeling actually…)
Moving on, My daughter and my niece (both higher rate tax payers) are determined to buy a Buy to Let Property in London. My daughter is a Doctor and has a limited company for the purposes of receiving payments for locum work. The company is likely to be extant for the foreseeable future. I asked Mark Smith in passing whether the company used for the locum work could be used legitimately to purchase my daughters half of the house. The answer was a resounding yes, provided the company articles are modified to include property rental as part of the business.
I took heart from this and advised my daughter to ask her accountant if he could change the company articles as necessary and to tell her how much it will cost. The accountants response was to offer a personal report for £650+VAT.
The pertinent facts are that my daughter and her cousin are taking a 5 year view of this investment and will be keen to sell after 5 years (I think that’s short termism, but they know best). Purchase price is £440k. Deposit 20%, mortgage interest 2% As I see it the tax changes will be ramping up from next April for 4 years and will be at there most draconian at that point precisely at the time when they will be looking to sell and get out of the B2L market for good and buy a residential place each. So perhaps incorporation benefits are marginal in this case especially as one CGT allowance will be lost if my daughter buys through the company and her cousin buys as an individual.
I am taking an interest as it seems a shame not to take advantage of the limited company as its overheads are already being met from other income so it is essentially free as far as the purchase is concerned.
I think my question is “is it really worth paying the £650+VAT for a report or is my gut feeling that the benefits of incorporation are only marginal given the 5 year time frame likely to be correct.
Any views and comments welcome.
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