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waqqas memon
waqqas memon,
Category: Tax
Satisfied Customers: 21
Experience:  Senior Manager at MMBA Accountants
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Looking to buy a property for investment purposes and would

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Looking to buy a property for investment purposes and would like some advice on the best tax options
JA: For which tax year do you need advice?
Customer: 2020
JA: Anything else you want the Accountant to know before I connect you?
Customer: No
Hi, my name is ***** ***** of the tax experts here. Before I can assist you with your query I would need to understand a bit more about your investment.1) Will you be investing on your own?
2) would you be purchasing the property with the help of a mortgage?
3) Do you have other income?
4) Are you looking to pass the property onto anyone in your family in the medium to long term future?Thanks
Customer: replied 1 year ago.
Hi Waqqas, please see comments below:1) Yes
2) Yes unless I go for a pbsa which is a lower cost
3) Yes
4) No, shorter-term investment 5-10 yearsThanks
Hi, based on your answers it would be best to open a ltd company and purchase the property through the company. It would give you the structure to pay the least amount of tax specially if you have other income.
waqqas memon and 2 other Tax Specialists are ready to help you
Customer: replied 1 year ago.
which I have looked into although I am uncertain I would be able to get a mortgage through a ltd company?
Customer: replied 1 year ago.
Also, is there any additional tax benefits with buying through a limited company besides paying a lower corporation tax?
Hi tried to call you through the system but could not reach you.
Customer: replied 1 year ago.
I didn't receive any phone call?
For mortgage purposes they would usually look at you other income and the rental income expected on that particular property.
Customer: replied 1 year ago.
Regardless of the limited companies financials as this will be a brand new business? Is mortgage interest tax deductible when doing it through a company?
it is tax deductible for a company.
Customer: replied 1 year ago.
OKay are there any tax deductions when paying myself the profits from the company and would there be any additional capital gains taxes?
The lenders would usually put a charge on the property, then access your personal income and finally if they require may be request a personal guarantee. Also worth discussing with a mortgage advisor but his response will most likely be on a similar note.
You can pay yourself dividends, first £2k of which has 0 personal tax and further amounts will be accessed on your personal income and be taxed at 7.5% basic rate or 32.5% if high rate tax
Customer: replied 1 year ago.
Which is the issue as because I am in the higher tax bracket at the moment, I will be paying an additional 32.5% tax which makes the profits untouchable, u
nless you have another solution?
You will have the same issue if you bought it through your personal name. You can use a trust however you will need a beneficiary who does not have any income for it to be tax beneficial.
Customer: replied 1 year ago.
Understood, thanks for your help
You are welcome. Last point - You can however withdraw an amount equal to the deposit from the company as you would have introduced those funds personally.
Customer: replied 1 year ago.
that wouldn't be subject to tax?
No because you would have loaned/introduced it into the comapny to buy the company.
Customer: replied 1 year ago.
That's useful, thanks!
Buy the property*
Could you please leave a 5 star rating for my help. Much appreciated.