I am considering buying a property to renovate and sell on again. I'm wondering about the most tax efficient way of doing this. I have a limited company already, so I have a couple of avenues of approach.
- Buy the house in a personal capacity (will fund privately without finance) and renovate it in a personal capacity and then sell it. I think I am liable to pay CGT but cannot reclaim VAT as I have used the allowance for the Home Improvement Incentive Scheme.
- Buy the house in a personal capacity again, but use my company structure to renovate it and charge me personally for the cost. Again, I pay CGT on uplift minus cost charged by the company (which reclaims and charges VAT on inputs). Is there an incentive here for the company to charge me for the entire uplift if I was to pay profit into pension fund or am I just increasing the VAT take?
- Third option is to loan money to the limited company to buy the property, renovate and sell. Does the company still get a deduction on the VAT if it is not charging VAT on the sale? Again, I think the company pays CGT on the profit and I have to chose to pay corporation tax, income tax, or put into pension after that. Are there other downsides to this structure that I'm not considering in terms of buying and selling the property as a Ltd. company such as stamp duty or transfer of ownership etc.?