Updating post from Reddit.
Hi all,
Looking for some advice on selling a few BTLs I’ve got in a limited company. The company also owes me about £75k in director loans, so ideally I just want to get as much money back into the company as possible.
Here’s the rough picture: Property 1 – worth £125k, mortgage £59k, original deposit 17k Property 2 – worth £160k, mortgage £93k, original deposit 23k Property 3 – worth £125k, mortgage £75k, original deposit 25k
I know I’ll get hit with corporation tax on the profits (and not CGT as it’s owned in a Ltd Co?, but I’m thinking about spreading the sales over a couple of accounting years to keep the tax rate down a bit.
Couple of questions:
Not looking for advice on taking money out of the Ltd Co (dividends, SSIP contributions etc), purely on the selling side and maximising what goes into the company after tax.
Cheers!
Your best option here is to speak to a tax adviser.
It will be false economy to try and do this yourself. It might even be more optimal not to spread the sales, pay tax and invest.
Each person's circumstances are unique so any advice given here will be in isolation without knowing your financial position.
Bear in mind that for the profits, it doesn’t matter what your mortgage or deposit is, to calculate the gain its Sales price (and associated fees) less purchase price (and associated fees) less capital improvements
What about all that mortgage interest?
This isn’t a DIY job. Shocks me how many people think they can save a few quick and then leave thousands on the table. Just off to operate on myself - got google so what can go wrong?
Just trying to get some information dude. I’d rather be informed when speaking to an accountant etc. than going in to it completely blind.
Sorry mate, came across harsher than intended. I can see that there are a lot of variables in your situation so it’s hard to give generic advice (which in property is usually the case).
The basics are yes you can and should deduct those costs for capital gains.
In terms of timing it doesn’t really matter in a company as much as in personal name.
Also, you may want to consider selling the company rather than the individual properties. A good advisor might be able to help you on that (saves a lot on legal and sales fees as well as a lot less stress).
My property accountant is actually great at thinking strategically (as he’s a property guy and not a generalist). So also to be fair to you not all advisors are equal. I’d highly recommend getting someone who knows property. Mine was a recommendation so maybe I got lucky.
Hope that was more helpful!