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As I understand it the company is a formality to purchase the freehold with another person. We are partners in the company. I cannot pay current market rent on my own flat. Is this what you are saying?
It is not your own flat Debbie, if is the company's flat which you occupy. Either you pay the company the market rental (which will make the company be liable to Corporation Tax at 20%) or you will be taxed on that rental as a benefit in kind. Whichever way the cat jumps there will be a tax liability, a classic example of Benjamin Franklin's dictum that in life there are but two certainties, death and taxes.
okay, I am totally confused. We bought the freehold and on advice formed a company so that both of us can be safe in our management of the properties. I cant pay a mortgage to a mortage company and then market rent so what you are saying is I am paying twice for my property I already own. No one would do this if this is the case. There must be another way then to own a freehold that doesn't incur bankruptsy!
We do own the freehold of our property and live in it and are paying the mortgage off over time. We just happen to be 2 flats who jointly hold the freehold and this is the recommended way to buy the freehold. Can you recommend any other ways we could have bought it?
Is it possible to change this if it hasn't been finalised?