SPV Ltd Company, Mortgages and Shareholders.

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    SPV Ltd Company, Mortgages and Shareholders.

    Hi I have set up an SPV Ltd co for a property purchase. We are now attempting to get a mortgage.
    Currently the ltd co has 4 ordinary shares worth £1 each.
    The issue is that I would like to sell 2 of the shares to a friend/business partner to invest in 50% of the deposit. This parson is Canadian and the mort company do not like this. The brokers have said that the Ltd company can take out the mortgage with just me as the shareholder/liable person and then sell the shares to the Canadian after the deal is done.

    Hmmmm. I am a bit cautious/worried about this.

    1) Is the mort company Ok with me selling shares?
    2) Is there a tax implication - ie I want to sell half the shares for half of the deposit and just get my money back tax free, as really all I am doing is just kind of bridging the purchase?

    Is there a better way to go about this?

    Many thanks in advance.

    #2
    May I suggest that your broker establishes the attitude of the lender. Whether the sale of share is done before or post mortgage completion the friend will hold more than 20% of the company , a breakpoint which normally triggers a requirement of lenders for the shareholder to give Personal Guarantees; if he has a permanent right to reside and has a good credit profile that shouldn't be a problem if indeed he is prepared to give PG's but if he is domicile do in Canada or elsewhere then that could prove to be a fundamental stumbling block particularly if the sale occurs post Completion as it might prevent refinancing of the property. So please get your broker to do his job properly and establish the facts for the interests of his client.

    Comment


      #3
      Thanks so much for the reply, I think your suggestion this is the correct course, I guess I just needed a sounding board/sanity check. Cheers.

      Comment


        #4
        No problem , sometimes it is easy to forget that just because someone is a shareholder and not a director that this puts them out of court so far as a lender might require their Personal Guarantees. Some lenders kick off at 20% and others at 25% but it is always assumed that the Directors have the great share stake.

        Hope all goes well with your plans.

        Comment

        Latest Activity

        Collapse

        • Implications of Gifting a % of Property
          by Claymore
          Hi

          My main residence is unencumbered. I am thinking ahead (with the thought of the 7 year rule on inheritance tax).

          If I gift my son 50% of my property now - would I still be OK to live in the house?

          Would there be any immediate tax consequences of gifting him...
          18-03-2020, 15:29 PM
        • Reply to Implications of Gifting a % of Property
          by Claymore
          jpkeates,

          That's lovely, thank you so much!
          24-03-2020, 01:50 AM
        • Reply to Implications of Gifting a % of Property
          by jpkeates
          That's another reason to use a trust,
          The trust becomes the beneficial owner of the property, so it moves out of your estate for income tax purposes (over seven years).

          You and your son would be the beneficiaries of the trust, so should anything happen to either of you, the trust...
          23-03-2020, 14:32 PM
        • Reply to Implications of Gifting a % of Property
          by Claymore
          Thanks JP. I am thinking of gifting him 50%, he will still be living with me for a few years.

          My biggest concern is that if he marries and then divorces etc - how that would affect me!...
          23-03-2020, 13:53 PM
        • Reply to Capital Gains Tax confusion
          by FluffyBunny
          Thank you jpkeates, very helpful
          23-03-2020, 12:51 PM
        • Capital Gains Tax confusion
          by FluffyBunny
          Hi

          We are considering selling our second home and wonder if anyone can help.

          Background: My husband bought the home in 1988 for £44,000. Over the years it has been rented out for 1 year, empty for 2 years and rented out again for the last 3 years. Up until 3 years ago it...
          17-03-2020, 17:38 PM
        • Reply to Capital Gains Tax confusion
          by jpkeates
          Your main residence is the place that you live. If you live in more than one place, you need to tell HMRC which is your primary residence and update them if it changes.
          Most people only have one residence, so it's just a matter of fact.
          Based on what you posted, it was your main residence...
          23-03-2020, 10:03 AM
        • Reply to Capital Gains Tax confusion
          by FluffyBunny
          Thanks for the reply. Can anyone help with my other questions please?
          22-03-2020, 16:43 PM
        • Reply to Tax Return or Letter?
          by Claymore
          Ha, bet you are. Lots of worried people.

          I haven't been totally absent, I have dipped in to read your threads quite a few times. Love your updates. Take care.
          20-03-2020, 16:05 PM
        • Tax Return or Letter?
          by Claymore
          Hi

          I remember there being a rental income limit where you don't need to actually complete a property tax return. Instead of completing the tax return you can write a letter to the tax office declaring the income and net profit. Is this still in practise?

          Also, if you do...
          17-02-2020, 16:41 PM
        Working...
        X