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Funding structure with JV SPV - advice needed

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I am in a bit of a dilemma on how to approach a JV with a partner. Quite new to property investing and currently have the below set up:

A= wife trading ltd 

B= husband (myself) + wife property SPV -  split 25 husband/75 wife

Now I am looking to be a JV partner where me/wife will  provide funding to JV partner to develop a HMOs

C= husband + wife  + JV partner SPV - with shareholding split 25/25 (husband and wife)  and 50 JV partner. My partner will hold this  JV under his own holding company. 

The capital will be mainly funded by my A (wifes trading ltd). and the aim of this SPV is to develop and hold the HMO with profits split 50/50.

Now can A provide funding to C under this current split? If so would this be Intercompany loan or Directors loan?

is there any negatives of doing this way?

Much appreciated if any one has any experience in these JV set ups and funding. 



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Keeping it really general and suggesting you take some advice on options for structures.

Inter-company Loan. Negatives - Needs to be paid back at some point so you are going to need a plan for this. What about if the trading company comes into difficulties? It might be that the loan can be written off but this can create tax implications. The Issue of repayment may be compounded when you don't have full control of the SPV and the plan is to buy and hold the HMO rather than to trade on. 

Directors Loan (I take it from this you mean extracting money from trading company as directors loan?) negative relies upon there being sufficient balance on the directors loan in the first place to withdraw sufficient funds. If you become overdrawn on the account then this can have tax implications. 

You could also potentially look at taking dividends/wages from the trading company but then you are potentially going to be hit with personal tax.

As an aside, hopefully you have done you due dil on the person you are planning on going into business with as it is a big commitment together.

Best of luck.

David M Slater ACMA 

Accufy Accounting  - Proactive accounting for property investors 

0208 242 4926    info@accufy.uk



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