LTC fund transfers

Question from Christo updated on 27th June 2018:

I'm purchasing a property into a LTC, which will be slightly cash flow negative in the first year or two. How do I offset the shortfall from rental income to mortgage repayment in and out of the LTC account? Do I do a personal once-off oan to the LTC? Should this be interest bearing? Or do I make up the shortfall by transferring funds monthly to the LTC account so that the mortgage can be paid?

Our expert Matthew Gilligan responded:

Typically you transfer funds on a monthly basis into the LTC to meet the shortfall. Funds transferred are treated as a loan from you to the company. There is no necessity for you to charge interest on this loan.

Matthew heads GRA's specialist property and asset planning division. He helps clients create optimal tax structures and build wealth through property. He has an extensive buy-to-hold property portfolio, is currently involved in over a dozen developments, and is author of two books - Property 101 and Tax Structures 101.

Search the Ask an Expert archive

Browse all questions in the Ask An Expert Archive »

Site by PHP Developer