How to purchase properties I intend to flip?

by Readers Question

10:08 AM, 15th August 2016
About 2 years ago

How to purchase properties I intend to flip?

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How to purchase properties I intend to flip?

I have some buy to Let properties in my limited Company and also in my and my wife’s private names.flip

I am looking to purchase properties for longer term Buy to Let and to Flip.

How should I buy these properties i.e. BTL through Ltd Co or private names and how should I purchase the properties I intend to flip (buy and sell on quickly)?

Many thanks

Martin



Comments

Michael Freer

13:17 PM, 15th August 2016
About 2 years ago

Given everybody's tax situation is different and you already employ an accountant for your limited company accounts, it is probably best to have a chat with them as they can advise based on knowledge of your exact circumstances.

Allan Wadsworth

18:33 PM, 20th August 2016
About 2 years ago

Hi Martin,
I have almost the same situation. ltd co and multiple personal rentals only had 1 property in the company though. which I just sold so had taxable profit to deal with. - 50% of that went into my pension. 3 weeks ago I started my next deal, converting a shop and a flat to 4 flats so I had to ask myself the same question! - My accountant gave me some pros and cons and said it's up to me. That was so helpful (NOT!)
I made my decision to use the Ltd company because I had built a good relationship with Lloyds bank and they were happy to lend (ok only 65%!) without questioning the companies source of funds - (I had to borrow a bit from a friend!) and they already had a debenture against the company.
It was probably not the best of reasons but the 3% SDLT saving, as its in a Ltd company and knowing i'll throw the profit into a pension pot and then get 25% back out, tax free helped.
On the accountant front I accept my guy isn't a magician but those I have seen who might be do seem to want me to magic a lot of money up for there fees. E.g I asked two well respected accountants in my area to quote for accounting and putting the profit into an existing pension pot - They both wanted £1000 just to set up the pension pot even though I already have 3 and one of those does allow Crystalisation. - O Crystalitation is getting the 25% out tax free without drawing a pension.
Best of luck
Allan (Portsmouth)

2:49 AM, 28th August 2016
About 2 years ago

Hello Allan
Have you confirmed that with a ltd co, you save the extra 3% even on 2nd+ properties? I have seen conflicting information and conversations with Conveyancing solicitors suggest that with a ltd you're not relieved from the additional 3% SDLT surcharge on properties beyond your home / 1st purchase or for BTLs.

If a ltd company's first property is not subject to the 3% surcharge even though you personally own other properties that would be very helpful information!!

Thank you
Yenyun

Shelagh Buckley

8:58 AM, 29th August 2016
About 2 years ago

Reply to the comment left by "Allan Wadsworth" at "20/08/2016 - 18:33":

Thanks Allan
Very interesting about a Ltd Co not having to pay the 3% extra stamp duty. Are you sure that this is the case, are you able to help with any supporting confirmation.
Also interesting about placing any profits into a pension fund and take out 25%tax free.

Mark Alexander

9:13 AM, 29th August 2016
About 2 years ago

Sorry to be the bearer of bad news but Limited companies are NOT exempt from the extra 3% stamp duty, even if it is the only property owned by that company.

Allan Wadsworth

14:31 PM, 30th August 2016
About 2 years ago

Reply to the comment left by "Mark Alexander" at "29/08/2016 - 09:13":

Hi Shelagh and Mark.
I am covering the 3% within my expected costs but the solicitor has said he does not expect the company to have to pay the 3%. The company T and C's are for property developments. This purchase is a shop (commercial) and a flat (Resi) that will be converted into 4 flats(Resi) and all sold off so I hope the solicitor is right...

Regarding the Pension. My company uses its profits to supplement its directors(me) pension pot with Old Mutual. OM place it in an Uncrystalised pot. I am allowed to draw 25% of the pot tax free. The remaining fund is then Crystalised and cannot be taken out without serious tax implications, although it can be transferred to other crystalised pension pots. N.B my company pension payment is deducted from profits, before calculating corporation tax... I'd phone Old Mutual Wealth if you want more details.
Allan


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