New house/work conversion/let to buy questions. Can anyone advise?

[miss mopple]

Ok, so this may be a bit of a ramble so bare with me but I could do with some info if anyone has the slightest clue (My Anchovy??)

We are thinking of selling our house and buying a 'project' house up the road. This house appeals to us as it has massive scope for extension and has a 100ft+ garden. It also has a huge garage that has a door to the garden and we are thinking that it would work as a playroom for my business if we converted part of it, which would mean that parents wouldnt even have to enter our living area as it has a separate entrance. It has oodles of potential.

My first question is if I were to do that what would be the best way of looking at it for tax purposes? Obviously we would do it for my business but if the house re sold at any time it could be converted as extra living space/an office etc. Would we be better just doing it as a family home conversion or trying to put it through the business in some way?

Also, DH is wondering about the concept of taking a let to buy mortgage on our current property, so we would own both houses and rent the one we are in now, giving us some extra income and investment for our future.

How would that affect my SA as a childminder? Would I need an accountant at that point?

I am a bit clueless about it all but if anyone has any info on either scenario I would be grateful for the pointers so we can investigate further and find the best way to do things

x

[PixiePetal]

I don't know much about what you have said, sorry :blush: but we own a house we rent out and live in a house part owned by DH (family farm) which we pay nominal rent for.

the profit from our old house rental income is shared between DH and myself for tax purposes - there's a bit on tax form for income from property. This is only our second year so still quite new to it and I think I could have claimed more off before tax - am waiting to hear from his accountant how he worked DH half out :rolleyes:

we bought the house when prices were really low in 1993 and only a few years left on mortgage - 2018 mortgage free :clapping: the rent covers it with some for us left over:thumbsup:

[Mamma4Ya]

Sounds like you will have a brilliant space for your business. :) If you are going to buy the house under the business name I think you will need a commercial mortgage, this may cause problems when wanting to sell it.

If you intend living in it then I would purchase it as a dwelling and then just convert part of the building for business use but remember the council will charge you sole business use for tax on that area.

Speak to your mortgage advisor explain the business side of it then speak to the council and HMRC. That is the only way you will know what you are getting into and where you stand.

[miss mopple]

Thankyou both, thats really useful info :thumbsup:

BST- we would definately be living in it. If I converted/ extended to provide a work playroom it would primarily be used for minding, but my children would obviously use the space too in much the same way that they use my playroom now (dining room). In our heads at the minute is the thought of doing it in such a way that if I ever gave up minding we could convert the space easily into extra living space for the family

Its all scary grown up stuff!!! :laughing:

[Mamma4Ya]

Thankyou both, thats really useful info :thumbsup:

BST- we would definately be living in it. If I converted/ extended to provide a work playroom it would primarily be used for minding, but my children would obviously use the space too in much the same way that they use my playroom now (dining room). In our heads at the minute is the thought of doing it in such a way that if I ever gave up minding we could convert the space easily into extra living space for the family

Its all scary grown up stuff!!! :laughing:

You may also need to submit planning permission to convert the garage so check out with the planning department :) If you can show that the space is used in the evening by your family (you could put a TV in there so it becomes a lounge) I dont think you would then need to pay business tax on it.

Keep us posted as I am looking to move so would be interested on how things turn out for you :)

[miss mopple]

Thanks. We don't think planning permission would be a problem as the house next door has extended on the side, back and into the loft and other properties in the row have done the same. We had a loft conversion done here a few years ago so know the drill with that I think but obviously we would check anyway.

DH has just gone to instruct the agent to put our house on the market :panic:

Exciting times ahead :clapping:

[Chatterbox Childcare]

Ok, so this may be a bit of a ramble so bare with me but I could do with some info if anyone has the slightest clue (My Anchovy??)

We are thinking of selling our house and buying a 'project' house up the road. This house appeals to us as it has massive scope for extension and has a 100ft+ garden. It also has a huge garage that has a door to the garden and we are thinking that it would work as a playroom for my business if we converted part of it, which would mean that parents wouldnt even have to enter our living area as it has a separate entrance. It has oodles of potential.

My first question is if I were to do that what would be the best way of looking at it for tax purposes? Obviously we would do it for my business but if the house re sold at any time it could be converted as extra living space/an office etc. Would we be better just doing it as a family home conversion or trying to put it through the business in some way?

It is my understanding that you cannot put any of the cost through for the actual conversion but you can for all the furnishings

Also, DH is wondering about the concept of taking a let to buy mortgage on our current property, so we would own both houses and rent the one we are in now, giving us some extra income and investment for our future.

We let out houses and we do our own books, really easy. If you make a profit then it can be shared at whatever percentage you want between the owners. You can take all, part or none of it depending on what DH and you earn. Obviously once your allowance is gone any profit on any business is taxable and this would be too.

How would that affect my SA as a childminder? Would I need an accountant at that point?

I am a bit clueless about it all but if anyone has any info on either scenario I would be grateful for the pointers so we can investigate further and find the best way to do things

x

I am sure Mr A will come along this week with some professional pointers :D

[MrAnchovy]

Firstly, if you are going to keep the other house and rent it out you are definately going to need to go through all the details with an accountant to minimise any potential liability to Capital Gains Tax and maximise the expenses you will be able to claim against rental income. Do this BEFORE you buy the new house or arrange any funding so you don't close any doors.

There are no tax allowances for the conversion or alteration of buildings for a business purpose, so there is no point going down this route. And if any part of your home is used exclusively for business purposes, you will be liable to Capital Gains Tax when you sell it, so make sure any work you do is in line with a family home that happens to be used for childminding during business hours. For instance whilst a separate entrance to the 'garage' playroom is fine, there needs to be an internal door to the house too (I assume this is an integral garage?). And as BabySignTalk says, make sure every part that is used for childminding is also used by the family for a few hours each week. Your accountant should then be able to come up with an apportionment of household expenses, including mortgage interest, which will minimise your tax bill.

Don't claim for furniture in rooms that are partly used for childminding, the rules and calculations are complicated and if you do this you can't claim the 10% wear and tear allowance which will almost always leave you worse off in the long run. You can however claim for any safety equipment (you might get away with an installed smoke alarm system as safety equipment) and of course toys and equipment exclusively for childminding.

But like I say, see an accountant - the right decisions could save you thousands a year in income tax and the wrong ones could cost you tens of thousands in capital gains tax.

[miss mopple]

Thanks Mr Anchovy, thats all really helpful :thumbsup: