Company loan to 'flip'/develop property?

R

riviera

Registered User
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Is it possible, or more probably, under what circumstances, could a company borrow money (e.g. from a bank), and use that money to buy a property, pay for renovation, and sell for profit?

Background:
Very young company, a few months old. Company bank balance will be circa 30% of loan value.

This is theoretical. I have no plans at the moment. I'm just trying to analyse whether its best if I put it through a company or not.

Generally, what are guidelines for company loans for this type of thing? What about setting up a company to develop property, as opposed to renovations?
 
major tax issues involved....

cat and cgt....

not a goer
 
There's nothing to stop you setting up a company to invest in or renovate property.

Your company will own the property, not you. You can't take money out of the company (with the possible exception of company repayment of money you lent to the company without paying tax.

Your company can reclaim VAT incurred in renovation/purchase costs, but no real advantage there from a personal point of view.
 
Millionaire property developers do it by studying the market exhaustively, creating the most tax efficient structures within which to realise profits, and sometimes even use some of those profits to grease the wheels of influence with the odd bribe.

But mostly they do it by knowing the market and probably learning from mistakes as much as successes.

By all means set up the company - but remember the company is a seperate entity from you and you cannot just transfer cash or assets from it to yourself without paying income tax.
 
you can setup your own self administered pension scheme as a proprietory director where you can extract money from a company into a pension - tax free -

Any other ideas anyone??....
 
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