Process for lending money to Ltd Co for BTL purchases?Make Text Bigger
My unmarried partner and I have residential and rental property. We decided to add future properties in a Ltd company to help children and minimise tax. We have roughly 25% deposit and additional stamp duty (146K) to invest in an HMO (420K, 8% return plus 10% 6 month appreciation).
I would like to lend the money to the company then purchase within company and eventually recoup the loan.
However there are much smarter people here, and so I would be really interested in a step by step guide to adding assets to a company. The goals here are mid to long term, but I would like to realistically add 5-10 properties in 10 years.
I am aware *ATED would be a concern for more expensive HMOs.
Finally a recommendation for lenders would be gratefully received.
All the best
*Editors note from https://www.gov.uk/guidance/annual-tax-on-enveloped-dwellings-the-basics
ATED is an annual tax payable mainly by companies that own UK residential property valued at more than £1 million.
You’ll need to complete an ATED return if your property:
- is a dwelling
- is in the UK
- was valued at more than:
- £2 million on 1 April 2012, or at acquisition if later, for returns from 2013 to 2014 onwards
- £1 million on 1 April 2012, or at acquisition if later, for returns from 2015 to 2016 onwards
- £500,000 on 1 April 2012, or at acquisition if later, for returns from 2016 to 2017 onwards
- is owned completely or partly by a:
- partnership where one of the partners is a company
- collective investment scheme – for example a unit trust or an open ended investment vehicle
A new ATED band will come into effect on 1 April 2016 for properties valued between £500,000 and £1 million. The normal filing and payment date for properties falling into this new band is 30 April 2016.
ATED returns must only be submitted on or after 1 April in any chargeable period.
There are reliefs and exemptions from the tax, which may mean you don’t have to pay.
Meaning of ‘dwelling’
Your property will be a dwelling if all or part of it is used, or could be used as a residence, for example a house or flat. It includes any gardens, grounds and buildings within them.
Find out about valuing different types of properties for example mixed use, more than one dwelling and multiple interest properties.
Some properties aren’t classed as dwellings. These include:
- guest houses
- boarding school accommodation
- student halls of residence
- military accommodation
- care homes
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