Buy to Let as Limited company and stamp duty on first purchase question

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    Buy to Let as Limited company and stamp duty on first purchase question

    I'd be really gratedul if any one could offer some advice as I've tried countless local accountants and cannot seem to find one to give me the exact answers I need.

    I'm at the early stage of setting up a ltd (spv) company to hold my current main residence, which isn't mortgaged and wholly owned valued at around £150k. Once it's tenanted I want to release some equity/mortgage from the property and start purchasing buy to let's.

    I'm a higher rate tax payer and also buying a new property with my partner. I've worked out it would make more sense to use the ltd company for tax efficiency purposes. I.e. no additional/higher stamp duty on the new purchase with my partner that would be our first time buy. And also savings on paying at 40% tax with regards to rental income.

    My question is if my new company were to buy the property off me (which I would sell as a director's loan) would it be subject to any stamp duty,? (Or Land transaction tax, as the property is in Wales). If I do have to pay then it doesn't make much sense to transfer it in terms of additional/higher stamp duty savings associated with me buying the new property with my partner as an 'additonal' rather than 'first buy'

    My other question is whether someone can recommend a good national accountants or solicitors which specialise in this type of area that I can use? As I'd rather pay a fee and use someone to set it up for me than do the accounts myself .

    Apologies for any confusion or misunderstandings I may have as I'm new to this.

    Thanks in advance,

    Kind regards, Darren.

    #2
    If you transfer the asset to your Ltd, the company will have to pay stamp duty. You need to work out the cost/benefit in transferring to your ltd company as opposed to keeping it and dealing with it as under your self assessment. Remember as a personal buy to let, if you were to mortgage it you wouldn't be able to able to get any mortgage relief, but through your ltd company it would be an allowable expense (until there is a change in policy).

    Regardless if it remains in your possession or in the companies name, any future property purchases would be treated as an additional property, and attract the additional stamp duty fee.

    Concerning the accountants, majority of accountants would be able to deal with this, as it is like other forms of companies, the accounting is the same, they just need to be clued up with the latest guidelines and accounting regs.

    Comment


      #3
      Thanks for your response Ash. Most helpful.

      I'm in the process of buying my new main residence now so even if I pay the additional stamp and then sell the proposed buy to let house to my ltd company I can claim this back within 36months? Would you possibly know if that would be the case even if I had tenants in it at the time?

      One thing I've been told since is that my private relief to CGT will be applied on the less valued property(the one I'm planning to BTL via ltd co) if i sold it to the ltd company and therefore wouldn't have CGT relief on the higher valued house if I sold that in the future? Does anyone know if this is correct?

      Cheers.

      Comment


        #4
        The sdlt is normally paid by the buyer for property in England .

        But for property located in Wales from April 2018 onwards , sdlt is replaced by LTT ( Land Transaction Tax ) paid to Welsh Government Revenue unit.
        The starting level for charging LTT seems to be £180K , and requires using Welsh Registered Solicitors.

        https://gov.wales/land-transaction-tax-guide

        You should check the rules with a solicitor firm and tax accountant firm in your town in Wales.

        It is buyer of the property who has to pay sdlt or LTT ( in Wales ) and 3% extra applies if it is a second property.

        If you dispose the former home to your company , you should arrange for sale completion to company on day 1 and complete purchase of new residence on day 2 to avoid paying the extra 3%.

        I would not rely on 36 months for claiming back 3% LTT because after Brexit , such claim may be ended due loss of large tax payers moving into EU..

        If the former home was your main residence for the entire period of ownership , the capital gains is exempt for CGT.

        Comment


          #5
          Hi Gordon thanks for the information.

          But for property located in Wales from April 2018 onwards , sdlt is replaced by LTT ( Land Transaction Tax ) paid to Welsh Government Revenue unit.
          The starting level for charging LTT seems to be £180K , and requires using Welsh Registered Solicitors.



          So if my company buys my house from me, it's around 150k, then I would pay no ltt? I was told a surcharge of 3% would apply regardless of threshold levels as the entity is a company not individual so different stamp,/ltt rules apply? This answer would be critical in my decision. If you have any knowledge of this i would gratefully appreciate it!

          Cheers. Darren.

          Comment


            #6
            Well found the answer quoting the LTT

            https://gov.wales/higher-rates-purch...nical-guidance

            ​​L8021 The higher rates conditions for non-individuals (conditions for companies)
            Where:

            the buyer, or one of the buyers, is not an individual, and
            the main subject matter of the transaction is a major interest in a dwelling, or major interests in 2 or more dwellings, and
            the chargeable consideration given for that major interest is £40,000 or more (the deemed market value rule may apply - see LTTA/2460 for further details).
            the transaction will be subject to higher rates.

            Example
            C Ltd owns no interests in any residential property. It acquires a freehold dwelling costing £60,000. It is liable to the higher rates on that acquisition, as any purchase of a dwelling by a company is charged the higher rates.

            Comment


              #7
              If your company buys the residential property from you , the company ( i.e buyer ) has to pay the LTT if over property is over £180K.

              Its up to you to get a quote from a conveyancing solicitor firm ( in Wales ) which will be acting for the company ( buyer ). You should not rely on answers from this forum which may not be correct in Wales.

              Comment


                #8
                Thanks for you replies much appreciated

                Comment

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