Updating post from Reddit.
Hi, I am looking at buying a flat in an Ltd Co and renting it out. I’ll then be moving to Germany for 3 years to study. I’d like to talk to someone in finance to talk this through, but finance is a huge field and I don’t know who to speak to. Someone was recommended to me but said he cannot give advice as I’d be abroad. What specific terms do I need to find someone appropriate to speak to?
Part 2: I’d like to go into this meeting with appropriate questions and background information. My current understanding with (approximate values) is as follows:
On Purchase:
Property price £200,000
Deposit £50,000
Stamp Duty £11,500
Renovation £10,000
Solicitor+Survey £2,500
Purchase Total £224,000
Per Year:
Mortgage £10,000
Estate agent fees £1,500
Insurance £300
Accountant £200
Maintenance fee £2,000
Deductions £4,000
Rent £17,000
Profit £13,000
Tax?
On Sale (fully made up):
Sale price £250,000
Profit (remove purchase total) £26,000
Small profit tax 19% £4,940
Sale Profit £21,060
You’re not factoring in the interest paid unless. I am missing something ?
Putting a rental in a limited company to then sell would mean either 1) you sell the company and achieve less than a market price. So no it’s not going to be 250k sale. Or 2) you sell the property at market, unoccupied and pay tax on the income taken out, which means you ending up paying the tax you wanted to avoid. Doesn’t make sense.
To get BTL mortgage you generally need to have an income beyond the rental income.
Sounds like you're trying really hard to make a quick buck whilst you're studying, but it also sounds like a recipe for disaster! Put the 50k in UK gilts for 3 years at ~4% yield, 0 hassle and 0 tax implications.
Honestly don't bother. If you're coming to Germany to study focus on that, being an overseas landlord can be a pain. Unless you have someone to manage it for free you're going to need to pay an agency so there's around 10-13% of your profit gone. You will probably avoid UK income tax but also you'll need to declare this in your German tax return here. Sounds like you're going and coming to Germany for an experience, just stick the money in an index tracker. If you like it here get a buy to let in Germany as returns can be better than the UK