Director’s loan account for property investment limited company owners
November 24, 2021
You can loan money that you have to a limited company. This is the case whereby you buy a house, and a bank provides the limited company with a 75% loan to value buy-to-let mortgage but needs the 25% deposit. The 25% deposit for the buy-to-let property comes from the company directors or company shareholders.
A director or shareholder of a property investment company is owed this money. The loans from them to the property investment company may be paid back to them without any tax liabilities. You do not pay tax on the repayment of debt.
Moreover, directors and shareholders of property investment companies do not pay tax on certain amounts of interest charged to the limited company. The amount charged and tax-free interest income very much depends on the tax band of the individual.
The interest charged to the limited company is a cost to the property investment company and will benefit from a corporation tax relief.
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