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Is it legal to rent to yourself?


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Good Afternoon,

I just wanted tho throw another question out there to people. Is it legal to own a property under an LTD and rent it to yourself personally for say £1. It would be beneficial to pay the repairs on your personal property and pay less corporation tax as it comes under company outgoings.

Does anybody do this, and does it work successfully? Is this even legal as it might be seen as tax avoidance in the eyes of the law?

Appreciate the feedback.

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Yes it is legal if the finance terms do not prevent it. However, you will personally have a benefit in kind tax charge and the company could be within the ATED (£3,700+ per annum) if value over £500k. You will also lose any principal private residence relief on future disposal. Occupying properties owned by a company you have an interest in is rarely the best option.

Jerome

Jerome@TaxAntics.co.uk

www.TaxAntics.co.uk
 

 

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On 2/16/2021 at 5:18 PM, daniel_k said:

Is it legal to own a property under an LTD and rent it to yourself personally for say £

It's not illegal though if you have a mortgage it is very-likely to be against the Terms and Conditions.

Buy-to-Let Mortgages are mostly unregulated but if you reside in the property it is a regulated transaction.
It's fine for lenders to go from regulated-to-unregulated but the regulator is not happy with "consent" just been given from going from unregulated-to-regulated.

If that makes sense.

You don't want to break the T&C of a mortgage contract as they will demand immediate repayment and at best blacklist you internally and at worst externally with CIFAS. This can mean paying Early Repayment Charges (ERC) and other costs.

:wub: Get Mortgage Advice from my Team at Bespoke Finance on 08009202001 or email hello@bespokefinance.info 
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Please don't take my messages on Property Hub as Personal Financial Advice, just a rambling guy passing time on a Coffee Break.
 

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On 2/16/2021 at 5:18 PM, daniel_k said:

Good Afternoon,

I just wanted tho throw another question out there to people. Is it legal to own a property under an LTD and rent it to yourself personally for say £1. It would be beneficial to pay the repairs on your personal property and pay less corporation tax as it comes under company outgoings.

A scheme like this will surely create big problems for the future. 

As discussed above, it will definitely be against the terms of your mortgage. 

Also, HMRC might not be too happy with this. £1 is not market rate, is it? This could be seen as aggressive tax avoidance or tax evasion

Also, what happens when you try to remortgage your property? Nobody will lend you money as the property only earns £1 of rent..

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