Hi all,
I have read through the many posts on why you should not buy residential properties through a profitable limited company:
However I ask you to consider the following scenario and offer your words of experience and advice:
we have a profitable limited company running for the last couple of years and are thankfully in a position to have a healthy cash balance at the year end
We have just went sale agreed on a group of 4 properties (residential buy to let) at a significant market discount due to the fact sellers needed quick sales coupled with another being a bank ridding one of them of its books.
The cost of the 4 properties has totalled €149,999
We are mortage free on our own home at this time thankfully.
However we have been turned down for a mortage despite a strong savings record and offer to put a hold on our accounts up / freeze the amount we will borrow until the mortage is paid off.
The company is less than 3 years old was the reason for this- whilst the bank were really apologetic and understand we have enough to buy them, the reason for us doing so was to offset mortage relief.
Anyway- the only really different point here I will add is:
As I am 32 and my partner is 28, we have sought professional advice and have been advised to form a holding company and buy the properties through the company and then move them into the holding company immediately.
As most of our business is done overseas, it is very feasible for us to be out of the country for 6+ months at a time- we had chosen to locate to Ireland as a lower cost of set up for us etc
As a non resident for 3 years, we are legally able to avoid CGT on the disposal of the properties / or the company being liquidated and we would expect to do this when I am 40 or thereabouts.
There is also the CGT exemption we could take advantage of now from buying up until end of 2014.
We have done the figures including rental, expenditure, usc, landlord/letting reg charges and insurance etc and still come out with a yield of 5% after everything....this is based on the lowest rent i could possible allow and 11 months rental per annum. (used the tables on the previous threads)
Compared to the bank where we currently lose money on deposit...
I know this is a very similar argument to other peoples scenarios posted but I hope with the twist of the long term plan of 8 years time everything being liquidated will encourage some interesting responses from someone some more experienced than ourselves!
Thank you and i look forward to hearing your responses
Tonster01
I have read through the many posts on why you should not buy residential properties through a profitable limited company:
However I ask you to consider the following scenario and offer your words of experience and advice:
we have a profitable limited company running for the last couple of years and are thankfully in a position to have a healthy cash balance at the year end
We have just went sale agreed on a group of 4 properties (residential buy to let) at a significant market discount due to the fact sellers needed quick sales coupled with another being a bank ridding one of them of its books.
The cost of the 4 properties has totalled €149,999
We are mortage free on our own home at this time thankfully.
However we have been turned down for a mortage despite a strong savings record and offer to put a hold on our accounts up / freeze the amount we will borrow until the mortage is paid off.
The company is less than 3 years old was the reason for this- whilst the bank were really apologetic and understand we have enough to buy them, the reason for us doing so was to offset mortage relief.
Anyway- the only really different point here I will add is:
As I am 32 and my partner is 28, we have sought professional advice and have been advised to form a holding company and buy the properties through the company and then move them into the holding company immediately.
As most of our business is done overseas, it is very feasible for us to be out of the country for 6+ months at a time- we had chosen to locate to Ireland as a lower cost of set up for us etc
As a non resident for 3 years, we are legally able to avoid CGT on the disposal of the properties / or the company being liquidated and we would expect to do this when I am 40 or thereabouts.
There is also the CGT exemption we could take advantage of now from buying up until end of 2014.
We have done the figures including rental, expenditure, usc, landlord/letting reg charges and insurance etc and still come out with a yield of 5% after everything....this is based on the lowest rent i could possible allow and 11 months rental per annum. (used the tables on the previous threads)
Compared to the bank where we currently lose money on deposit...
I know this is a very similar argument to other peoples scenarios posted but I hope with the twist of the long term plan of 8 years time everything being liquidated will encourage some interesting responses from someone some more experienced than ourselves!
Thank you and i look forward to hearing your responses
Tonster01