What are the pros & cons of opening a limited company instead of in my personal name

[Paddyboy0576]

Hello All,
I am in a position to add to my small portfolio of buy to let properties..Can anyone give me a bit of guidance.. Dont get me wrong...im small time but for once in my life im doing something I love - buy a house in need of renovation and do the work myself and let out the rooms. If you get the impression im coasting - im not!. But i do love this work & wake in the morning wth a spring in my step for a change. I have done the day to day slog of production line work for donkeys years just to keep the wolf from the door so now im happy at my work.
Im wondering if I can open a company and have my potential properties in the company. This would limit my liability yes? and also give me peace of mind that my personal assets would not be required as security? What would the tax implications be? My plan would be to buy properties that need work and carry out this work myself (outside of the qualified tradespersons I need) over 3-4 month. Then rent out the rooms etc and do the same again. Im an only son from a farming backround and dont want my home place etc used as security. I have great faith in my abilities but its the pease of mind of not having the farm at home etc used as security for my possible future ventures.
I have completed 2 houses of my own & 8 in total (6 for other people) so i know the ins & outs of the work involved. What ide like to gather is anything that you guys might think of or contribute.
Thanks

 

[Tank]

Re: What are the pros & cons of opening a limited company instead of in my personal n

Paddy, This area is very complicated, and I would strongly advise that you get a good accountant or financial advisor that has worked in this area. At the end of the day, whether you are a sole trader of Limited company, you will need this backing so look now.

One thing that stands out above is that you note that in a limited company you will get peace of mind and protection of your own assets. As a person with significant experience over the past ten years, please believe me this is not the case. Even at our height with 32 staff, I was asked to personally guarantee everything, including loans lower than 20K. I have never had bad credit or any reason for the banks to do this, and I am sure that in the current situation they will be even more protective with loans and property purchase.

I was in the property business of sorts, and have pulled out of it 6 weeks ago. I managed to ensure that none of my private assets were affected by minimising my bank loans, leases etc to what the business could afford to lose even though I was personal guarantor, and that proved very valuable to me and my family. 3 of my clients went bankrupt, and that obviously put us in the sh1ts. Everybody is paid off now, I am out of work, but we have peace of mind and our house. I would not touch the industry or place any of my assets at risk in the current situation.

Finally, I revert back to my previous statement. Use a financial/tax/accountant consultant. May be the bext 1000 euros you ever spend. It was for me!

 

[woods]

Re: What are the pros & cons of opening a limited company instead of in my personal n

There is a tax surcharge on property companies so you will play higher taxes as well as having to give personal garantees for any money borrowed.
There will also be a double taxation on profits when you sell the properties because the company will have to pay CGT on any gains and then when the company gives the money to you, you will have to pay income tax on it.

 

[Brendan Burgess]

Re: What are the pros & cons of opening a limited company instead of in my personal n

Sorry - this has been covered so often already on Askaboutmoney that I am closing this thread.

brendan