Buy to let

Buy to let

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A client has no mortgage on his house. He is an engineer earning £50000 in his own company. He is married.

He wants to mortgage his home £200000 and buy a number of houses to rent out. His first cost £55000 and has a tenant already.

Should he buy through his company or privately with his wife? He does not intend to sell any houses he buys but to pass them on to his children when he dies.

He says he has £1000 a month spare in the company which would pay 3 mortgages perhaps.

Hopefully some of you have similar clients and can let me know the downside of either buying through a company or privately.

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By Anthony123
13th Nov 2012 19:31

passing on to children

If he is seriously intending to keep the properties to pass to his children then you might give some thought as to whether they would rather have shares in a property company which have no open market for sale or inheriting a property which does (and even if co-owned with siblings someone might buy that share).

That's before getting to the tax issues. For example if the children inherit properties direct then they get a CGT base cost uplift on death. The same would apply to the actual shares but not the properties held within the company. So if the children inherit and want to sell right away to realise cash potentially they could be paying corporation tax on gains which then dilutes the amount that can be distributed to them on winding up the company rather than pretty much no CGT compared to inheriting personally.

Of course I don't know how old his children are and how long term all this planning is for.

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