Director loan to company to buy Business Property

Director loan to company to buy Business Property

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The company in question cannot obtain finance to purchase a business property. therefore, the director has taken a personal mortgage and will loan the money to the company to purchase a business property.

This transaction to be by way of dirctors loan. The company to make repayments to him to cover his mortgage repayments.

How is the interest dealt with by both parties? Will he pay tax on the interest paid on repayments by the company? can he claim releif on his repayments?

Luke Thomas

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By Richard Willis
13th Oct 2008 15:51

Not a tax expert; just a synic!
Hi Luke

If I were said director, and assuming that the loan is for 100% of the property, I would be looking to buy the property in my own name and rent it to the company. That way if the company goes [***]-up he will at least have the premises to sell to recover some, at least, of his liabilities.

Perhaps the tax experts will comment.

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By NeilW
13th Oct 2008 11:35

Relief available
This should be fully relievable if done properly.

http://www.hmrc.gov.uk/manuals/saimmanual/SAIM10210.htm

NeilW

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