Move Property into LTD Co

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  • Move Property into LTD Co

    I purchased a semi commercial property about 15 months ago, this have been converted into 2 shops and 2 flats, the numbers are as follows :

    Purchased for £150k
    Refurb cost of £50

    Current value of £240k

    What are the tax implications of transferring it into a limited company. I have yet to set up a limited company and hope to go forward with more BTL with the LTD company.

  • #2
    you basically will be selling to the ltd company.

    you will have capital gains of 40k -each owners allowance of around 11k.
    The company will need to pay stamp duty at 2% on 90k (240k - 150k @ zero rate)

    as a director you will loan the company the purchase price of 240k & the stamp duty cost.

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    • #3
      I forgot to ask, who values to property ? I have guessed a realistic figure of £240k but do I need to get a professional value ?

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      • #4
        you should get an estate agent really but Ive transferred in the past based on my own judgement

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        • #5
          forgot to add - it may work out better if you kept this in your own name - as its semi commercial you can still claim full finance costs. The only thing is the income stream may be taxed at a higher level if in your own name

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          • #6
            Originally posted by hopelesslydevoted View Post
            forgot to add - it may work out better if you kept this in your own name - as its semi commercial you can still claim full finance costs. The only thing is the income stream may be taxed at a higher level if in your own name
            i have a mixed commercial (flat above restaurant) - how can i claim finance costs on the resi? (sorry if i've misunderstood something here)

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            • #7
              Originally posted by johnwick View Post
              i have a mixed commercial (flat above restaurant) - how can i claim finance costs on the resi? (sorry if i've misunderstood something here)
              my understanding is that you can't if you have separate loan for residential & commercial elements.

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              • #8
                I've just done a search on this & it seems theres conflicting advice re: 100% interest relief & apportionate as you said Johnwick. OP is probably best to purchase via LTD then

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                • #9
                  You can reduce your capital gains tax liability by transferring part of the property at different times, or by retaining the freehold This could, however, get quite complicated.

                  If HMRC think your valuation is unreasonable they can challenge it. If "reasonable care" was not taken to get a good valuation you can be fined. Fines can be 100% of unpaid tax on top of the tax.

                  Having at least two valuations by estate agents of market values seems sensible, 3 would be better if the first two differed by much.

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