Removing Equity

[Dan]

Hi,

Does any one know, or have experience of, the tax implications of increasing the mortgage on a property and hence removing equity? I have a limited company which owns the property in which I am the sole share holder.

[Yardleystar]

Hi

This is an area of confusion for many people

If you remortgage, the company may be able to offset the interest in certain circumstances even if the money is not spent on property related costs.

No tax will be due on any cash raised.

However, there will be a corporation tax liability if you draw the cash raised by the company, which you will presumably do by dividend. You may also face additional personal taxation if all or part of the dividend raises your income above the 40% threshold. You may be able to mitigate this by introducing shareholders.

[Dan]

Thanks Steve