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kirsti p

Limited Company first purchase mechanism

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Hi folks, 

I have just set up a limited company to handle future property purchases and have a Starling business account too.  I am unsure of the actual mechanism/procedures to follow to buy the properties via the new company. Is it as simple as depositing the funds in firstly and then buying the properties from there?

(I am releasing equity from my own home as well as refinancing existing properties held in my own name, so the funds will be in my personal current account to start with).

Many thanks,

Kirsti

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44 minutes ago, Mortgage_tom said:

 Your deposit funds will be lent to the company in the form of a directors loan.

 

Thanks I'll look into that, much appreciated.

 

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32 minutes ago, debbie franklin said:

make sure you claim full tax relief for the interest paid on the funds you borrowed to lend to the company 

Thanks Debbie, I have a lot of research to do as I've only just set up the company so I really appreciate that these are newbie questions. 

Am I right in saying that if a property is under £40K then I only pay 3% SDLT if through the limited company but not if I buy as an individual, and that if I buy a £50K property I would pay 3% as an individual and 6% as a limited company, 3% because it's in a limited company plus 3% because it's over £50K?

Thanks in advance,

Kirsti

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2 hours ago, debbie franklin said:

A property under £40k no SDLT either as individual or company. Property between £40k and £125k then only 3% either as a company or individual.

Deb

Oh ok I've misunderstood the info I've been reading/watching online, thanks so much Debbie.

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Hi @kirsti p

You've probably sorted this now, but basically you lend the money to the company as a director's loan.  In terms of the process, you transfer the cash from your personal bank account to the company bank account, and then you make any payments you need to make for investment purposes from the company account.

As long as the money is simply lent by you to the company and the company does not pay you any interest on the loan, then it's pretty straightforward.

Your accountant or bookkeeper should be able to deal with the accounting entries needed as part of your year end accounting.  In short, any money you as a director transfer to the business counts as "capital" - this is a special type of liability, i.e. money that the business owes back to you as a director.

Also, it's worth noting that when the company repays the director's loan you made, no tax is due by you personally on the loan repayment.

Feel free to message me directly if you have any questions on this.

Best wishes

Rob


Robert Heaton

Greenwich Bookkeeping | www.greenwichbookkeeping.co.uk

Author of "Essential Property Investment Calculations" - Available on Amazon

 

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