Purchase of Property through Company

W

westcoast66

Guest
I wonder if anyone could point me in the right direction here.

I have a company which has built up some substantial funds over the last few years. These funds are just sitting in the company account earning interest. An investment property local to me has come up for sale and I would be interested in buying it.

So, is it possible for my company to purchase this property from a tax point of view and rent it out? The company doesn't have anything to do with property investment at the moment.

Thanks!
 
i asked the exact same question a couple of years ago and was advised not to buy a property from company money
 
Well if the money is already in the company you will have toask your accountants as to what Tax you will have to pay to put it into your own name. As well as this you will have to check the Memorandum and Articles of Association toverfiy if the company is able to pursue this type of business.
Anyway the price of commerical property appears to be starting to fall at the moment.
 
Structure it as a self admin pension - the co can then make contributions tax free. consult your account for detailed advice
 
Buying an investment property in a limited company is generally, from a tax point of view, considered a bad idea. When the company goes to sell the property it will pay CGT on any gain. Then when the shareholders extract this money from the company they are taxed again, either CGT if they sell their shares, or income tax on money taken out of the company in the form of dividends or salary. It is often known as the "double tax hit".

What is the aim behind buying the investment property?

If a pension is used, the property is bought in the name of the pension, not the company. The pension is set up ("sponsored") by the company for the benefit of the directors. The company money is moved to the pension entirely tax free (no BIK for the directors). The pension can borrow to buy the property, earn rent tax free and sell the property with no CGT liability, because all investments in a pension are entirely tax-free.

The directors ultimately get the benefit of the structure when they retire, through a possible 25% tax free lump sum and their pension income in retirement.
 
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