Buying A Residential Property

Didn't find your answer?

Hello Folks,

My actual accountant is on holiday and I was hoping that you guys might be able to offer some advice ahead of me being able to speak with him. 

I am the director of a profitable e-commerce business turning over c£2.5m per annum. Currently we have c£700k in the bank split across the trading company and holding company accounts. I also have c£100k in the bank in personal savings. 

Currently (and crucially) I am unable to obtain a mortgage until May 2021. 

However, we would like to buy a specific residential property that has recently come on the market (at £400k). This is a rare opportunity to acquire the exact house we have had our heart set on for years (it's never been on the market before) and if possible I would like to find a way to make it happen. 

My question is this: Is there any way to use the surplus cash we have sitting in the bank to buy a residential property - and then us personally buy it back from the company when I am able to obtain a mortgage next year? 

The alternative I guess is paying myself a huge dividend and taking the tax hit? 

Any advice very warmly welcomed and incredibly appreciated. 

Many thanks

 

Collin

 

Replies (5)

Please login or register to join the discussion.

By johngroganjga
10th Sep 2020 09:36

Yes but there will be tax consequences if you live in it before you buy it from the company.

Thanks (0)
avatar
By Justin Bryant
10th Sep 2020 10:02

Surely you can just borrow the money from the company? Even better if you have a girlfriend (rather than a wife) that could do that to avoid a s455 charge (which in any event is just a refundable tax deposit).

The buy-back route is SDLT inefficient, especially as the company would pay the 3% SDLT surcharge.

Thanks (1)
.
By Cheshire
10th Sep 2020 10:05

Quote:

Hello Folks,

My actual accountant is on holiday and I was hoping that you guys might be able to offer some advice ahead of me being able to speak with him. 

I am the director of a profitable e-commerce business turning over c£2.5m per annum. Currently we have c£700k in the bank split across the trading company and holding company accounts. I also have c£100k in the bank in personal savings. 

Currently (and crucially) I am unable to obtain a mortgage until May 2021. 

However, we would like to buy a specific residential property that has recently come on the market (at £400k). This is a rare opportunity to acquire the exact house we have had our heart set on for years (it's never been on the market before) and if possible I would like to find a way to make it happen. 

My question is this: Is there any way to use the surplus cash we have sitting in the bank to buy a residential property - and then us personally buy it back from the company when I am able to obtain a mortgage next year? 

The alternative I guess is paying myself a huge dividend and taking the tax hit? 

Any advice very warmly welcomed and incredibly appreciated. 

Many thanks

 

Collin

 

You say 'we' - can the other 1/2 not get a mortgage?
How long is your Acountant on holiday for? Does he/she have no cover whilst away? As a sole practioner if an urgent query came my way whilst in Barbados I would be answering.

Thanks (0)
Replying to Cheshire:
Psycho
By Wilson Philips
10th Sep 2020 11:00

It surprises me (it probably shouldn't) as to the number of people coming on here when their accountant is "on holiday"

Thanks (1)
Replying to Wilson Philips:
avatar
By jonharris999
10th Sep 2020 11:38

When @Wilson says "on holiday" in quotation marks does she mean "in prison"?

Thanks (1)