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millymollymandy678

How to transfer property into a ltd company

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Hi, 

I am aiming to transfer two properties which are currently in my name into a ltd company. I don't have the funds in the ltd company to put down a 25% deposit on both properties. I would effectively want to use the money released from the sale as a director's loan to buy the properties. Is this possible? Or is there any way to transfer the properties without saving up a whole new deposit? 

Furthermore, does any property bought by a ltd company incur the extra 3% stamp duty, or is a ltd company exempt from additional stamp duty for its first purchase?

Thanks

 

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You definitly need to pay stamp duty and the transfer will not be straight forward given there is a mortgage company involved and the LTD is efefctively buying the property from you. I have only done this as 'cash' so not sure of the mortgage implications and if they are a showstopper

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In addition to the 3% SDLT, you may also be liable for Capital Gains Tax if your properties have increased in value, as you will need to sell the properties to your limited company at market value. This may then mean it eats in to the equity you're planning to withdraw to use at the Director's Loan. 

There's the option to incorporate the BTLs, but there's a lot of things you'll need to comply with in order to do so, and can be expensive which outweighs the benefits. 

Seek tax advice and mortgage advice before doing anything.


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5 hours ago, DerekT said:

In addition to the 3% SDLT, you may also be liable for Capital Gains Tax if your properties have increased in value, as you will need to sell the properties to your limited company at market value. This may then mean it eats in to the equity you're planning to withdraw to use at the Director's Loan. 

There's the option to incorporate the BTLs, but there's a lot of things you'll need to comply with in order to do so, and can be expensive which outweighs the benefits. 

Seek tax advice and mortgage advice before doing anything.

 

I am curious, does the property have to be sold to the LTD ?

Can it just be a Directors Loan ? or can it be a gift ?

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I asked an accountant about selling the property to a company for a minimal amount (the equivalent of a gift) and he said this wasn't possible as the house has to be sold to the company at market price to avoid people dodging capital gains tax.

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1 minute ago, millymollymandy678 said:

I asked an accountant about selling the property to a company for a minimal amount (the equivalent of a gift) and he said this wasn't possible as the house has to be sold to the company at market price to avoid people dodging capital gains tax.

 

Agree with this ^^

Think of a company as a commercial enterprise...it is set up to make money.

A company doesnt need to live in a residential house. 

Transferring a residential property into a company name is subject to all taxation due at market value, irrespective of the actual amount of the transfer.

As far as I know.. (I am a developer/investor not a taxation advisor)

Hope this helps (a bit)

Conrad


Conrad Paton

+44 7957 959851

conradpaton@yahoo.co.uk

https://www.linkedin.com/in/conrad-paton-424446110

 

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On 11/4/2019 at 10:50 AM, millymollymandy678 said:

Hi, 

I am aiming to transfer two properties which are currently in my name into a ltd company. 

I don't have the funds in the ltd company to put down a 25% deposit on both properties.

I would effectively want to use the money released from the sale as a director's loan to buy the properties.

Is this possible? Or is there any way to transfer the properties without saving up a whole new deposit? 

trying to do this thinking outside the box -  its not a 'go do it' or 'legal advice'...

do you presently live in either property or have done so in the past?

does either property currently have a lien or mortgage?

review this, what do you see? .... 

https://www.gov.uk/capital-gains-tax 

https://www.samconveyancing.co.uk/news/conveyancing/gifting-property-4-ways-to-gift-your-property-2928

then read on.

how would the company in the first instance purchase either of the properties if it has zero cash?

do you see yourself doing this? ... sell property one on the open market, take the capital gain hit, loan the proceeds to the Ltd company, then it can buy property 2 (all nice & legal) from you... with the proviso the Ltd company can get a mortgage & as you are aware, Ltd mortgages are usually at a higher interest rate than an in a personal name property mortgage.

lets suppose that you still have the two properties that you want to hold onto which you want to sell to the Ltd company.

can you get personal bridging finance so as to make a loan to the Ltd company, then go buy property one  at fair market value (with a mortgage), sell property one, then buy property two with the proceeds?

then there is the selling the property to the Ltd company below market value & gift the remaining value to the company. 

at some point in all of the above you need to deal with CGT as well as the company needs to pay SDLT on acquisition of the new asset.

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