Graham Bowcock

Registered with Property118.com
Saturday 22nd October 2016


Latest Comments

Total Number of Property118 Comments: 95

Graham Bowcock

14:11 PM, 23rd March 2019
About 3 days ago

Dividends And Other Tax Perks For Landlords Who Incorporate

Tim

I'm not an accountant so can't give a definitive answer, but there is a flaw if your proposal that I can see. If you do charge interest on your director's loan, which will then be tax deductible in the limited company, you will then personally have an equivalent receipt. This receipt will be taxable at your higher rate, so you will be worse off.

I am not sure that you can offset the external loan costs on your mortgage against the income, so you will lose out.

Next time you need to borrow consider keeping borrowing within the limited company. That way the finance and interest costs (and legals, etc.) are entirely tax deductible. There may be a small premium on interest payable by a limited company, but this is usually more than offset by the tax benefits (and does not affect your personal income/tax situation). We have just done this with Lloyds, loan to a limited company secured on our own house.

Graham... Read More

Graham Bowcock

14:11 PM, 23rd March 2019
About 3 days ago

Dividends And Other Tax Perks For Landlords Who Incorporate

Reply to the comment left by Tim Jones at 23/03/2019 - 07:36
Tim

I'm not an accountant so can't give a definitive answer, but there is a flaw if your proposal that I can see. If you do charge interest on your director's loan, which will then be tax deductible in the limited company, you will then personally have an equivalent receipt. This receipt will be taxable at your higher rate, so you will be worse off.

I am not sure that you can offset the external loan costs on your mortgage against the income, so you will lose out.

Next time you need to borrow consider keeping borrowing within the limited company. That way the finance and interest costs (and legals, etc.) are entirely tax deductible. There may be a small premium on interest payable by a limited company, but this is usually more than offset by the tax benefits (and does not affect your personal income/tax situation). We have just done this with Lloyds, loan to a limited company secured on our own house.

Graham... Read More

Graham Bowcock

10:07 AM, 22nd March 2019
About 4 days ago

Dividends And Other Tax Perks For Landlords Who Incorporate

There are some further benefits of incorporating.

Firstly, you can easily involve other people simply by the sale of shares; the ownership of the property stays the same. My accountant bought into one of my portfolio companies in 2000 and has had a healthy return on his investment; as he is of retirement age we have a plan to sell the shares to me and my wife, but it can be done over time to mitigate his CGT.

Secondly, we have passed shares in one company to our son at university. He can be paid a dividend and as he has no other income this can be up to £13,500, or so, each year tax free. If I were to give him that myself, I'd have to earn about £25,000. I have two other teenagers, so overall the annual saving will be significant. To help matters we have what are termed alphabet shares so we do not all have to have the same dividend.

We have a good tax accountant!

Graham... Read More

Graham Bowcock

12:00 PM, 14th March 2019
About 2 weeks ago

Friend lending money to buy property - how can I set it up legally?

Jean-Charles

You are right that you will need good documentation. Agreements with friends can be the worst for going wrong!

Have you thought about your friend becoming a director or shareholder in your company? This would give flexibility for them to put money into the venture, and for you to use it. You would still need proper documentation, but it may be easier than just having a loan. It may also give them some comfort as they would have some control.

I did this with a friend 20 years ago and business has bloomed without us falling out.... Read More

Graham Bowcock

11:51 AM, 14th March 2019
About 2 weeks ago

How do I minimise my losses?

Dear RM

How you proceed will depend entirely on the basis of the agreement that you have. If the tenants occupy on a single AST agreement they will be jointly and severally liable. You do not say if they came to you as a unit (i.e. they are friends, colleagues, etc.) or if you found them as individuals.

If there is one AST then you can pursue any of them, or all of them, for any losses.

If you have merely let the rooms to three individuals then there is presumably no reason why the tenants would be responsible for the third person disappearing.

As always in such cases, the pragmatic approach will be best in the first instance. It may be best to visit the tenants and get their view. Maybe they can readily find a third person who is acceptable to you to fill the void with only minimal loss and disruption.

You do have to be careful though about unilaterally ending the agreement of the person who is stuck abroad. You cannot just assume they are not coming back; if they turn up in a few weeks they may well be entitled to continue living in the property. Make sure you dot the i's and cross the t's otherwise you could be in trouble.

Graham... Read More