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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am a director of a Small limited company say ABC. I would

Customer Question

I am a director of a Small limited company say ABC. I would like to start a building a portfolio of student rental properties as a separate thing so I can plan to use it as my retirement planning. What is the best way to raise capital to fund the purchase of these properties?
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

, I'm Keith and happy to help you with your question.

My immediate reaction is to approach your bank or building society start. Failing that consult a mortgage broker or an independent financial adviser(IFA) to assist in finding a lender willing to advance moneys against such ventures. The interest rate, which would be allowable against the rentals Tax purposes, would be reduced if the loans raised were secured on the properties. Both mortgage brokers and IFAs will be licensed to give advice on the raising of loan capital.

I do hope I have shown you a way forward in this matter.

Customer: replied 1 year ago.

Sorry I think my question was too open ended. I think we all know about raising money thr bank and ifa etc etc..my question to narrow down is should I raise capital thr a bank via my my existing company (but I have to put down 25% refundable tax loan with hmrc) or as a personal loan which means I have to extract more money out of company ( hence more income tax )to pay loan or are there other cleverer ways?

Expert:  bigduckontax replied 1 year ago.
Yes, I must admit I thought your original question a tad odd!
Loans are outside the scope of UK taxation, although the interest payable to or from is, of course classed as income in the hands of the recipient. Thus if the company loans you moneys, a situation I do not recommend as loans to directors are fraught with danger and must be repaid within nine months of the end of the accounting period. From what you say I would suggest that raising a loan through your existing company might be the best solution. Can you not borrow from the bank direct on your own behalf?
Customer: replied 1 year ago.

the problem is my salary declared is next to personal allowance close to around 10k..so if the bank can only lend 4 x my salary then we looking at 40k max ..I and wanted to raise enough to pay properties in region of 150k per propertye at least..You said that company loans to director are faught with danger but you also say rasing a loan thr your existing company might be best solution - sounds contradiction what you said - I must have misunderstood what you mean by that?

Expert:  bigduckontax replied 1 year ago.
I am a diabetic ans about to have lunch. I will, like MacArthur, return!
Expert:  bigduckontax replied 1 year ago.
What I meant was that the company should raise the loan through say a bank, buy the property and manage it, thus avoiding the low level of loan you personally can raise through your low salary level.

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