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Flip Properties Through a Ltd Company or Individual???


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Hi, I am planning to flip a property in march this year, if successful I then plan on doing 1 or 2 more flips to raise some cash to then invest in buy to lets and HMO's.  Is it best to flip properties through a Ltd company or as an individual? I am currently a lower rate tax payer. 

Many thanks!   

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Hi Scott,

 

I am currently in the process of buying a property to flip in a Limited Company.

 

This is the first property that I am doing in a Limited Company and there are a few additional legal costs that I was not aware of:

 

  1. There is a solicitor that acts for the company in the purchase of the property.
  2. I am using Bridging Finance so I am indirectly paying for the Lender's Solicitor as well
  3. As director of the company I personally need separate legal representation to set up a Personal Guarantee for the Bridging Loan.

These aren't massive amounts, but they all add up.

 

Also, because I am buying through a Limited Company I have to pay Stamp Duty. I don't own any property in my own name, so this could've been a potential saving.

 

More me it was an exercise in Excel to compare all costs if I were to buy it as individual vs in a Limited Company. If you are planning on doing a few flips in a financial year I believe a Ltd Company is the better option, as these profits can potentially push you into the higher tax bracket as individual.

 

Good luck with your project and let us know your progress!

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  • 3 weeks later...

Sorry for the late reply Jaco, I think I am going to take the Ltd company route. Am I right in saying that you can use the profits made from a flip in a ltd company for a buy to let and not pay dividend tax? Just corporation tax I'm guessing. Sorry if it's an obvious question, I'm new to the whole property tax thing! 

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Hi Scott,

 

I believe you can, although I am not a tax expert, so speak to an accountant to make sure.

 

I can recommend the last few podcasts on The Property Hub as well the the Property Geek, that go into quite a bit of detail about Limited Companies. Definitely worth a listen.

 

All the best!

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