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Do I need to speak to an accountant to set up an SPV?


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Hi,

So i purchased a property early 2019 that needed a little work and now rent it out on a consent to let with my residential mortgage. After the 5 year fixed term I hope to switch over to a buy to let with the equity from the house which is my first rental property. I have a deposit for my second rental property assuming I can get a 75% btl mortgage after the coronavirus lockdown, i have decided ltd company is the way to go as i want to build a portfolio over the next 10+ years.

Do I need to speak to an accountant or do i just set up with companies house and transfer the money from a business account and speak with brokers to arrange mortgage? I'm wanting to get things in place so I can start making offers on some properties I'm interested in as soon as the lockdown is lifted? 

Thanks 

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You can do the set up yourself and it’s relatively quick to do but it’s often worth at least talking to your accountant or tax advisor first. Sometimes a limited company isn’t the best option for someone although if long term investing is the strategy and a higher rate tax payer, then it’s often the best way forward! Good luck!

Jerome

Jerome@TaxAntics.co.uk

www.TaxAntics.co.uk
 

 

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On 5/7/2020 at 6:17 AM, TaxAntics said:

You can do the set up yourself and it’s relatively quick to do but it’s often worth at least talking to your accountant or tax advisor first. Sometimes a limited company isn’t the best option for someone although if long term investing is the strategy and a higher rate tax payer, then it’s often the best way forward! Good luck!

My accountant just does my self assessment. Im going to need an accountant that specialises in property for 20/21, im pretty sure another rental property would put me in the higher rate or somewhere close so it would be a good idea to speak with a tax advisor.

How much would this service cost and any recommendation?

Thanks for the reply

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  • 2 weeks later...

Hi BigSi, I’m an accountant, in industry and I just setup my ltd company last year and bought a BTL through it. I’d be happy to answer any of your questions. The setup is fairly easy but there are other costs to consider such as higher interest rates due to fewer lenders, higher conveyancing costs and capital gains tax on selling. I agree with the previous advice, I think it’s more suitable for long term, higher rate tax payers with the goal of at least a medium size portfolio. Hope I haven’t put you off lol. 

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  • 2 weeks later...

Hi @BigSi

I hope you are well.  I agree with the rest of the posts in this thread.  One thing I would add is that if you do decide to go down the limited company route, you'll need to get the company and the bank account set up before you start making any offers really, as things can move pretty quickly if you get a deal agreed.

In terms of the limited company set up, you'll want to avoid unnecessary costs relating to filing year end accounts.  You'll probably want to set up the limited company and then leave it as inactive / dormant until you make your first investment.  That way, if you don't make any investments right away, you won't need to file accounts and incur any accounting expenses. 

There are also some other things you can do to lower costs in the early days, like postponing your year end by up to six months to put back the date you'll need to file your first set of accounts.  So, for example, if you set up your company sometime in September 2020 the default year end date would be 30 September 2021.  But you could delay this by six months, meaning the first set of accounts you'd need to file would have a year end date of 31 March 2022.

Just a couple of ideas to help you keep the admin costs lower in the early days.  I hope this is helpful.

Best regards

Rob  

 

 

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  • 3 months later...

Hi @Rob Heaton, I set up my ltd company in September last year, and have just gotten a notice to file my first confirmation statement.  The company is still dormant as I haven't made a purchase yet, there are no funds in the bank account etc. I can't work out on the govt website what I need to do. Any advice for me?  

Many thanks

Nicole

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