I'm buying a residential home with my partner valued at 525k.
Currently, I will pay 3% surcharge on the £525k property because I intend to keep my flat which is valued at £425K. My partner is a first-time buyer.
What I’m planning to do is sell my current residential home (the flat) to my limited company (SPV) and use that company to rent out the property via a buy to let mortgage. The larger picture is to purchase a few more BTL properties within the next 5 - 10 years using the limited company. I’m also a higher rate tax earner and intend to use this company just to build a portfolio of properties over time.
My calculations are these:
Limited Company will pay stamp duty of 3% over £40K, so £12,750 to purchase my current flat at a value of £425k.
There is no capital gain tax because I’m selling my current residential home to the company at current market value of the flat. The flat has never been rented out and never had a buy to let mortgage. Just standard residential mortgage.
Because I’m buying another residential home at the same time as selling my flat (current residential home) to my limited company, I only pay stamp duty above £500k so that would be £1,2500 for a property value at £525K.
In essence, because I only have 1 property in my personal name, I don’t pay or can claim tax relief of the 3% surcharge for the second property. So I wouldn’t pay the £17K, 3% surcharge on the property valued at £525K.
Is my thought process and calculations correct here? or am I missing something obvious here?
I know about the costs of using a solicitor to do the paper work and the accountant to do tax returns on a on-going basis and higher mortgage rates via a limited company but am I missing something with additional costs just to get the property into the limited company.
I will of course speak with a property accountant to get clarity. Just want to get clarity from the community if my thought process is correct.