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Lettings via a Limited Company

Two brothers inherited a couple of properties. They would like to let them out and have been told that a corporate structure would be best. In practical terms the letting will make a profit within a year although substantial (and genuine) repairs in the region of £50K are needed before the lettings commence. The annual profit from both lets will be about £30K.

The properties are owned jointly by the unmarried brothers. One of the brothers lives in one of the properties but will probably not do so once it is let.

Does anyone have any comments?

Leonard James


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By admin
28th Jan 2000 23:45

Renting Properties via a Company
A lot more information is required to answer fully. However, the brothers would presumably own shares in a company 50/50. One one hand they would loose their capital gains tax exemption relief on ultimate sale. But may find that the profits are liable to lower tax rates than their personal (40%?) rates. They might also consider leasing the properties to the company and it managing them and it making the bulk of the profits. (The best of both worlds?) Careful thought and professional advice should be taken, it is might even be possible to structure the operation in such a way as to be able to reclaim some of the VAT on the repairs!

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