The specialist property accounting advice we offer is always specific to each individual client, but there are some questions and concerns that crop up quite regularly. Here are a few of our frequently asked questions:
1. Can a Limited Company Own Freehold Property?
Yes, but generally (we never say never) we wouldn’t recommend it because when the company sells the property it will pay corporation tax on the profit and then there will be income tax to pay by the shareholder/directors when extracting the profits from the company
In addition to that depending upon the size of the transaction there may be significant adverse Stamp Duty Land Tax (SDLT) consequences of a property being owned by a limited company.
2. Can I Use The Property Personally If It’s Owned By My Limited Company?
Yes, but you will have to pay rent, at the current market value, to the company to use it.
3. If I Jointly Own A Property, With Another Person, That I Rent Out How Do I Split the Income?
If you own a residential property with your spouse then, generally speaking, the rental income has to be split 50:50 regardless of the capital sharing ownership. If you own the property with someone other than your wife it may be possible to split the income in a different proportion to the capital sharing ownership.
4. I’ve been to One of Your Lectures and I’ve Realised That My Present Accountant Has Incorrectly Prepared My Limited Company’s Property Accounts. Is There Anything I Can Do?
Yes, if you engage us to act for the company and if we concur with your view it may be possible to revise the prior year’s accounts by means of a Prior Year Adjustment which would correct this error.
5. Why Can You Help Us In This Field When Our Present Accountant can’t?
We specialise in property and the accounting and tax aspects of it. Some accountants specialise in other areas of accounts and tax and therefore this may not be their speciality. Amongst our other clients we act for the largest growing HMO (Houses of Multiple Occupancy) Franchise in the country and as well as acting for that business, its associated businesses and the personal tax affairs of the partners and directors, we also act for the bulk of the franchisees, their limited companies and their associated businesses.
6. Won’t I Pay Inheritance Tax At 40% On The Value of My Property When I Die?
It depends what your will says but when you come to us we will discuss potential capital gains tax and inheritance tax when we first meet you. It may be that after this discussion the property is bought in more than one name to mitigate these taxes.
7. If I Lived In the Property Before I Rent It Out Am I Still Subject To Capital Gains Tax When I Sell The Property?
It depends how many properties you own, how long you own this property before you sell it and how long you lived in the property. Generally speaking if the correct elections have been made (there are time limits in which these elections must be made) then any potential capital gains tax liability can be significantly mitigated.