Buying property through a company

Can a private individual set up a company to buy houses and then buy their own house through that company and rent it back? Are there any benefits of doing this?

This proposal can become complicated regarding the tax treatment, so it is wise to take advice from a chartered accountant before commencing. If you set up a company to buy and sell houses including development, then the houses are treated as “stock” and the company is regarded as a “trading company”. If it is a small company then the Corporation Tax is 19% of profits up to £300,000. If the company is engaged in just buying and selling houses, the company is regarded as an investment company and Corporation Tax is 30% whatever the level of profits.

I’m not sure what you intend in the second part of the question regarding buying your own house through the company. As an individual you are exempted Capital Gains Tax on the gain arising from the sale of your “main residence” and you need to consider how the arrangement you propose would affect that situation. If a company pays the living accommodation of an employee (all directors and other employees earning more the £8,500 pa), broadly the benefit is the annual value of the property (annual letting value).

Using the vehicle of a limited company can also affect the financing arrangements of property purchase. I recommend that you take advice from a chartered accountant so that all the ramifications of your proposal are clear.

See also: Buying property through a company – can you rent back your own home?

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