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A boring LTD company question :S


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Hello hubbers!

I love this place, makes me feel at home. So I have a quick question...

The two rentals we have are in mine and my wife's joint names. How does the stamp duty now work here? If we were to sell those houses to a brand new LTD co. would we not have to pay tax on the first property or does owning the limited company still essentially mean it's a second home of our own where we'd need to pay the duty?

All the best to you all!

Dave

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Hi Dave, If you sell your houses to a limited company you will have to pay:

1) Capital gains on the difference between cost being purchase price plus improvements and the market price of the property

2) There is still 3% stamp duty on both properties

However, it is worth noting that both you and your wife each have £12,300 capital gains allowances (example: Flat costed £100K - now worth £120K = Gain £10K each less Capital Gains Allowance means no tax to pay)

I expect the reason you are looking at putting the properties into a limited company is to get full tax relief on mortgage interest, so could still be a good move in the long term. So depending on your personal situation it is an opportunity.

 

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You need to get some tax advice thats specific to you as holistically there might be much more going on that affects what you will pay.

 

My understanding is that properties purchased by a company do qualify for the current stamp duty holiday though which was a surprise to me:

Quote

Companies as well as individuals buying residential property worth less than £500,000 will also benefit from these changes, as will companies that buy residential property of any value where they meet the relief conditions from the corporate 15% SDLT charge.

https://www.gov.uk/guidance/stamp-duty-land-tax-temporary-reduced-rates

043_logo_final_03.png.0cdf828351f81e6097208048ac2d018d.pngStuart Phillips

Independent, Whole of Market Mortgage Broker

AALTO Mortgages Ltd

Web  www.aaltomortgages.com

Email  sales@aaltomortgages.com

Call  020 7183 1101

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