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Hi All, i currently own four BTL properties under my own name, and has been looking into a LLP/Limited Company structure for tax reduction purposes. The current rental income level (all rental) is about to put me into the higher tax bracket. It would be great to have the community's input on whether there's a specific income threshold that I should hit before it's tax efficient enough for the restructure. Or is there any criteria or condition that I should meet before consider the switch? Thanks in advance. Pete
Hi All First post so here goes! I'm considering building up a portfolio of BTL properties over the next few years in the UK. I'm an Irish passport holder who is currently working in Saudi, so I'm a non-UK resident investor. I worked in the UK years ago. I am currently looking at 2 options - setup my own SVP LTD company and / or a JV with a UK business partner . If financially feasible, I will likely use both strategies. As I am a foreign investor and my potential partner is a UK resident I'm unsure if it would adversely affect the business profitability and create issues when deciding to extract profits / sell properties from the portfolio. I currently pay no tax in the UK and my potential business partner would be in the 40% band - again unsure how this would impact on any potential partnership. I'm a bit unsure of the best approach for company structuring, so thought I would seek feedback from the forum. I will of course get professional advice but I'm trying to expand my general knowledge first. Overview of my options and general queries I have: Option 1: Only Myself (SVP LTD Company) Target market Northern Ireland. I may also look at Scotland if property supply / obtaining finance becomes an issue. Which country is the best UK country to establish the company in? BTL properties in range of 50-90k purchase price, with 5-10k light refurb works to add value / increase rent chargeable where required - separate company for renovations beneficial? Initial investment via director loan to company = GBP 60k. I may also initially need to purchase 1 or 2 cheap properties with cash to demonstrate previous BTL experience to get financing. Plan to purchase 2 - 3 BTL's a year for the first 5 years. I will review after 2- 3 years and adjust my strategy if required. Exit strategy - retirement pot, so I plan keep / reinvest all profits in the company. Hold onto properties longer term, potentially sell one every few years if needed or market price is good. Option 2: SVP Business Partner - LTD or LLP Company Structure? UK passport holder/resident and myself. My business partner may also go to work in Saudi in the future, possibly in 1-2 years. Company structure - SVP for BLT mortgages- unsure if Ltd. company or LLP be best route? Target market Scotland - is Scotland the best UK country to establish the company in? BTL properties in range of 40- 80k purchase price, with 5-10k light refurb works to add value / increase rent chargeable where required - separate company for renovations beneficial? Initial investment via director loan to company from both parties= GBP 30k each, so GBP 60,000 in total. Plan to purchase 3-6 a year over 5 years. Re-assess strategy year 3. Exit strategy: UK business partner wishes to let money sit & reinvest into the company for 2-3 years, draw director salary, get his initial director loan out of the company and potentially sell off the odd property if decent returns achievable from year 3 onwards. Exit strategy: I'm unsure about which approach I will pursue, need advice as I'm unfamiliar with UK tax system and if our circumstances will impact profits / returns. Hopefully the above makes sense. All feedback welcome, thanks in advance!
Jon Crafer posted a topic in Mortgage AdviceHi all, were just dipping our toes into the the BTL market, our accountant advised us to set up a separate company from our main businesses in the form of an LLP, we have a good deposit of £75k and are looking to put that down on two properties, we decided our plan and budgets going forward, however after a meeting with our Mortgage Broker last week im a little deflated as he had never come across an LLP in BTL markets and argued the savings might be offset by the interest rates hikes, he has come back to me since then after doing a little research himself to say that the market for LLP mortgages is very small and has asked us to discuss this further with our accountants which im setting up a meeting next week, i have googled LLP mortgages and i come up with the same two or three companies, am i missing something or is it really that small a market and are we doing the right thing with an LLP, I have a lot of faith in our accountants so im a bit torn. Does anyone have an opinion on all this or any advice ? regards Jon
Inherited from a mother with Dementia
Bakerteer posted a topic in Introduce yourselfHi My name is James. Bit of a back story; My dad bought a 2 bed flat near where I grew up in `97 after reading rich dad poor dad. He was terrified of making a loss and its turned into a gold mine. When he died in `04 my mum used the money from his life insurance to buy more property and now has a small portfolio. Two flats in South East London near where we live, a flat in Preston and a student pod in Loughborough. She built this up as her pension. It has had fantastic capital growth and great cash flow with a very low loan to book value. A little over a year ago my mum was diagnosed with dementia. She's still early stages but I it seems that she had not been managing will with her property's and finances in general for some time. She had always been quite secretive about her finances. But after a frank discussion she agreed to let my sister and I look after her finances for her to ensure that she is looked after. The properties need tending to and her taxes and accounts were a mess. It took me forever to search the whole house and find all the bits of paper and still don't have it any any real kind of order but i am working on it. We took financial advice from a tax adviser and decided to transfer the ownership into an LLP with my mum my sister and myself as members. This has the benefit of helping with inheritance tax but also means that my sister an I can manage the portfolio without having to use LPA all the time (which i have found to be frustrating and limiting.) a mum can still have all of the income. The process of transferring the properties into the LLP has taken a lot longer than i expected with lots of details I didn't know to expect. We need to refinance to cover the existing lending on the portfolio, i had to get a business bank account which Barclays made a nightmare [i might write a post about this] found out that the property bought in `97 had a short lease and needed extending. We want to draw capital out of the properties at the point of refinancing with the aim of having cash to be able invest further. Turns out lenders want to know exactly what we want to spend the money on. Ive felt like there has been a lot of hoops to jump through and i have been put through the ringer. much of it is a result of inexperience. And during this time i have changed jobs and got married. so have had a lot on my plate. I started listening to the property pod cast and found Rob and Rob kept saying "we talked about that in episode..." and so i thought i would start from the beginning and am just getting to the point where they are introducing the property hub and i heeded their advice to get on here and chat. My aim ultimately is to grow the portfolio and the cash flow so that if and when my mum needs more intensive care we can afford the best available. She currently lives a good life, has a great social life, plays tennis several times as week and goes on at least two cruises a year with her partner. but unfortunately she has a degenerative disease an i want to be prepared for the worst and provide the best. My first priority is my mum but I'm hoping that there might be some surplus for my sister, my wife an I to enjoy. I love the idea of the dream line and want to sit down with everyone and work out how to forfill everyone's dreams. I've yet to do this and want to work out how. In the short term i need to shaw up what we currently have. some of the properties are quite tired and need work to bring them up to a high standard, and things like extending leases. fighting with management companies ensure all service charges are paid and upto date, working out what has been spent in the past few years and see if i can get mum a rebate as im sure she overpaid. While the cash flow is good i feel that everything that comes in goes out on some unexpected debt or charge or tax bill. I like rob and rob's mentality of outsourcing and want to get a good team of solicitors and accountants in place. I feel like I've picked up a ball of sting with lots knots and ends sticking out everywhere and i need to weave it into a beautiful quilt. generally turning chaos into order. To this end i am really interested in finding processes that make everything run smoothly. The flat bought in `97 needs a complete refurb. Like I said my dad was scared of loosing money and spent the bare minimum at the time to bring it up to a rentable standard and has had no money spent on it since. now needs a new bathroom, kitchen, rewire, floors boards, carpets, boiler and more. Currently my wife and i rent it off my mum as nobody else would. slightly longer term i want to expand the portfolio and like i said the cash flow. I have followed the markets for years tried to invest myself and have several thousand saved up in sliver. i feel the property market might be in for a bit of a slow down with increasing interest rates and a slowing turnover environment i feel there could be a killing to be made with foreclosures and probate and distressed sellers in the next 18 months. I want to be in a position to pounce. While my mum mainly went for two bed flats im open to many options, considering shop's with flats above, airb'n'b property , im also interested in agricultural land. but as with everything i know little and want to learn. I look forward to learning lots in this forum and joining the community. I've already signed up for the meeting in Waterloo on the 6th September (august was fully booked) if there are any posts or threads that people can point me to relating to inheriting a disorganised portfolio or from someone with dementia. how to plan for dementia care. or regarding the process of transferring into an LLP. also i will soon be undertaking the large refurbish (i have to) and any threads relating to the process to get everything done as quickly as possible will be great. speak soon