I am a builder looking for sites to develop. As a sole trader, my accountant advises me to start a company and let the company get a mortgage to buy the property, I would drip feed the company funds to carry out development from my personal capital. The company would employ my partner and I and this would be beneficial for tax purposes. I understand a little regarding company taxes and taking a wage from the company.
I am sure this is all perfectly fine, but how does a newly formed company go about being approved for a mortgage or a developers loan?
And secondly if the company owns the properties, when the properties are sold, does the company incur CGT or just the companies tax on the profits?
You will be guaranteeing the bank that the loan will be repaid. Maybe this means you will put up other property as security too. You are building to develop and onsell, no capital gains tax as you are doing this as a business. Get some good advice on GST too.
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