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Buying A Residential Property

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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)

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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.

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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.

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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.

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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"

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Replying to Wilson Philips:
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By jonharris999
10th Sep 2020 11:38

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

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