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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3825
Experience:  FCCA FCMA CGMA ACIS
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Sam, I am thinking of buying a buy to let property if I

Customer Question

Hi Sam,
I am thinking of buying a buy to let property if I put down the deposit in cash can I pull that money back before I start paying tax on the income?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question. The news I bring will, I fear, not be to your liking.
You appear to be confusing capital with income. If you use your rental income to pay off the deposit that is up to you. However it does not affect the tax position and tax will still be levied on the total rental income received irrespective of what you actually do with the moneys. Furthermore, paying off capital will reduce the amount of interest you pay and that interest is, of course, allowable against the rental income for tax purposes.
I am so sorry to have to rain on your parade.
Customer: replied 2 years ago.
Hi Keith,
I guessed it might be something like that to be honest.
Does that change if I created a limited company or something similar and then paid it back as a directors loan?
Expert:  bigduckontax replied 2 years ago.
No, exactly the same situation would prevail. The rental income would merely be liable to Corporation Tax (CT) as opposed to Income tax, CT is levied at 20% whilst Income Tax can be as high as 40% or even 45% depending on the individual's aggregated income.
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.

Thank you for your excellent support.

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