Has anybody set up a trust of company to buy property?

b4bmm

As the title says i am wondering if anybody has set up a trust or a company to purchase property?

Is it hard to do?
Is it expensive to do?
What are the advantages and disadvantages of doing either of these?

Orlaw3136

b4bmm wrote: »

As the title says i am wondering if anybody has set up a trust or a company to purchase property?

Is it hard to do?

No

b4bmm wrote: »

Is it expensive to do?

Depends.

b4bmm wrote: »

What are the advantages

Tax, generally.

b4bmm wrote: »

and disadvantages of doing either of these?

Administration (cost).

Also reluctance on lenders' part to lend to such entities without personal guarantees of natural people in place, hence no real advantage for the typical punter while still incurring the expense.

murphaph

There is generally no tax advantage of buying property through a company. Quite the opposite in fact. There's a dedicated thread about it over on askaboutmoney.com if you care to look for it.

Edit: assuming the "company" is really just a couple of people. I think below 5 shareholders and there's a surcharge which makes the whole thing unattractive financially.

Orlaw3136

murphaph wrote: »

There is generally no tax advantage of buying property through a company. Quite the opposite in fact. There's a dedicated thread about it over on askaboutmoney.com if you care to look for it.

I have no intention of getting into it in detail here, but broadly :-

a) as I said no advantage for a typical individual buying a house, just cost and admin hassle.

b) however if the property generates revenue it can be much more tax efficient that the revenue earner, so to speak, is a LLC or other non-natural person.

murphaph

Plenty of reasons to avoid it mentioned here

b4bmm

In my case. It's a small commercial property that will be paid for by cash by 3 investors. Originally I was planning to put my name on the transaction but because I may be buying another investment property in the near future I thought it may be advantageous for tax or otherwise not to put my name on the deeds for this one. I currently have no properties. That's was my thinking behind doing something like this.

Thanks for replies so far, now that I have made it clearer hopefully I can get
Some more accurate responses.

Rental income is the only revenue that will be generated from the property for the 3 investors.

Marcusm

I disagree with the suggestion that the principal advantage which might arise is a tax advantage. It is possible, contrary to the Ask about money comments, that some tax advantages might arise in particular areas. The most significant advantage, which has been ignored in the new bubble era, is the limitation of liability with respect to any debt which might be raised to acquire the property. There are countless businesses and individuals who might be in a better financial positon had they limited their liability to the finance raised to acquire property.

murphaph

I can't see many banks lending to limited companies to buy investment property. They may have done in the past but if that advantage ever existed I doubt it does now.