Property owned privately

Property owned privately

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My client wants to buy 10 houses. He has discovered that it is cheaper and easier to get a mortgage in his own name so intends to buy properties himself and lease them to his own (new) property company for the mortgage interest plus a bit to cover admin say. He does not intend to sell the properties but in 30 years his children may with to inherit shares perhaps. The company will rent the properties out so the profit in the company is the rent less what he personally charges for leasing.

He does not intend to take money out of the comapny but eventually the company will buy a property itself.

This set up is to obtain cheaper mortgages rather than to save tax. The company will pay tax at the higher rate of 23% on property.

My client is just into higher rate tax and does not want more income at the moment himself.

Can anyone see any catastrophe in any of this?

Thanks

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By 401K
24th May 2013 20:51

it is unlikely that mortgage providers will premitt sub-leasing in the conditions of the mortgage. It works in theory but not in practice because of need for the right to vacant possession in default.

Having done this it is cheaper but not easy to buy & dispose of within a limited company.

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