Residential to LTD BTL stamp duty on new house?

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    Residential to LTD BTL stamp duty on new house?

    Hi all,

    I currently own a property ABC and want to transfer it into a limited company buy to let. My question is split into some parts;

    Will I become a guarantor on property ABC once it forms part of the limited company? If so will this appear on my credit report?

    If I want to buy a residential property at a later date will I have to pay the additional stamp duty on property XYZ? Or will I just be liable to the usual rate on single properties?

    Any help is welcome :-)

    #2
    You will probably have to have a personal guarantee for any loan in the company's name. That wouldn't normally appear on a credit report.

    No. The company and you are separate entities.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Thanks I just assumed so but didn't know where I got that assumption knowledge, thank you.

      Comment


        #4
        I am assuming that your property is unencumbered if not then the property will have to be refinanced and since it is a Regulated Loan ( owner occupied) this will prove very difficult to achieve.
        Should the property be unencumbered , HMRC will treat it as a sale and purchase and whilst there may not be any CGT liability since it is your primary residence , the acquisition will to the best of my knowledge necessitate Stamp Duty to be paid. Do please consult an accountant for complete advice on what you are proposing.
        Any borrowing against the company’s property will indeed require you to provide your full Personal Guarantee , this is obligatory in corporate borrowings.

        Comment


          #5
          I won't be living in the property that's being transferred to the Ltd company. That will be put up for let, as I'm already renting. So I assume the Ltd company will pay stamp duty as I'm selling the house to my company, is this what you mean?

          Comment


            #6
            In that case you will be liable to pay CGT as well. And you have to report it in real time to HMRC.

            Comment


              #7
              Mike 511, Your assumption is indeed correct. The property is Not being transferred as there is no case to support this assertion. You have decided to sell it to Ltd Co X which itself will have to satisfy the Solicitors of the source of monies to be used in the acquisition and it will have to pay the standard SDLT. If the property has been let then the CGT liability kicks in . My advice is if indeed you are not already doing so is to ensure you keep HMRC onside by ensuring that you have disclosed all the income being derived from Land & Property.

              Again speak to an accountant regarding the entire process , do not accept such assurances from anyone including mortgage brokers , we as an entity have a good grasp of such fundamentals but the defining advice emanates from this professional group.

              Comment


                #8
                Originally posted by loanarranger View Post
                Mike 511, Your assumption is indeed correct. The property is Not being transferred as there is no case to support this assertion. You have decided to sell it to Ltd Co X which itself will have to satisfy the Solicitors of the source of monies to be used in the acquisition and it will have to pay the standard SDLT. If the property has been let then the CGT liability kicks in . My advice is if indeed you are not already doing so is to ensure you keep HMRC onside by ensuring that you have disclosed all the income being derived from Land & Property.

                Again speak to an accountant regarding the entire process , do not accept such assurances from anyone including mortgage brokers , we as an entity have a good grasp of such fundamentals but the defining advice emanates from this professional group.
                Thanks I agree with you, the house hasn't been let yet or started generating any income so the let will start after it transfers to the Ltd company. Thanks for this detailed explanation, I will ask for further advice from the accountants but I just wanted to confirm from people here who may have experienced this before. I will keep this thread up to date if and when the transaction completes.

                Comment


                  #9
                  Originally posted by Mike511 View Post

                  Thanks I agree with you, the house hasn't been let yet or started generating any income so the let will start after it transfers to the Ltd company. Thanks for this detailed explanation, I will ask for further advice from the accountants but I just wanted to confirm from people here who may have experienced this before. I will keep this thread up to date if and when the transaction completes.
                  From CGT p,o.v it matters not that "the house has not yet been let", but rather that you were/are not living there as your PPR (you said "I'm already renting"). Be sure to declare it very shortly after the sale.

                  Comment


                    #10
                    Originally posted by AndrewDod View Post

                    From CGT p,o.v it matters not that "the house has not yet been let", but rather that you were/are not living there as your PPR (you said "I'm already renting"). Be sure to declare it very shortly after the sale.
                    Thanks but does it matter if I'm still on the council tax for the address at ABC but also renting elsewhere and paying council tax there too?

                    Is there a formula sheet I can find to try to work out what the CGtax would be?

                    Comment


                      #11
                      It is a matter of fact where your primary residence is. The Council Tax payment is only relevant if it is your primary residence in every respect (the address the tax office have for you, where you actually live, that you have no other main address at all, --- if you have more than one address you can nominate in advance one of them as your primary residence (if it is actually that).

                      And it is not just a final status -- it depends on the status for the entire period of time of ownership.

                      How long have you had it, how much did you pay, what will it sell for, have you ever actually lived there....

                      Comment


                        #12
                        And let’s not forget that as you are paying rent on another property one has to assume rightly or wrongly that your “ main residence” is being let , if the answer is yes then the rental has to be declared to HMRC and if there is a mortgage did you gain a Consent toLet ?

                        Comment


                          #13
                          Originally posted by loanarranger View Post
                          And let’s not forget that as you are paying rent on another property one has to assume rightly or wrongly that your “ main residence” is being let , if the answer is yes then the rental has to be declared to HMRC and if there is a mortgage did you gain a Consent toLet ?
                          I've owned it for 8 years and have always lived there but I also work away a fair bit so also usually rent another place during the week. The property has never been let to anyone in that time, it's only now that I've decided to let it or transfer it to a Ltd company.

                          Comment


                            #14
                            Thanks Mike511 for clarifying it.

                            Comment


                              #15
                              Originally posted by loanarranger View Post
                              Thanks Mike511 for clarifying it.
                              So to summarise.

                              Property ABC will be sold to LTD company, the Ltd company will pay stamp duty.

                              I will personally pay cg tax, which I would pay anyway in any sale right? (does anyone have a good website I can use to plug in some numbers?) I've tried Google but can't work out if they are good.

                              Then I can proceed to buy a residential property as I won't technically a property in my name, so I won't have to pay the additional stamp duty?

                              Comment

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