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Buying property from a director / shareholder

I am looking for any creative ideas on this one!!

I have a client who owns a building which is rented to his Limited company. I have warned him he will not get ER due to market rent.

He wants to (for reasons I cannot go into here)  to have the Limited comany, in which he owns 100%, owning the property.

If he gifted it, then I had assumed for accounts purposes I would need to show at market value any way - but. as he is connected it will be at Market Value for CGT. He could do an holdover relief claim, I assume though!

Any thoughts?

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So...

... if he rents it to the company, what sort of building is it? Is it a commercial building that's less than three years old? If so, think about the VAT position.

SDLT will be on market value irrespective of any actual consideration.

Yes, you can holdover the gain, provided it's used for the purposes of a business carried on by the transferor or transferee.

The creative idea would be, if possible, not to transfer it to a company. Other limited liability vehicles are available.

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By BKD
24th Feb 2013 14:51

VAT

Assuming that the lease is not 21+ years (which would be unusual with a commercial property) the 3-year point is irrelevant.

EDIT - ignore that (my) nonsensical response. Of course it is relevant, as regards the transfer to the company (I read/typed far too quickly and assumed that George was talking about the rental treatment).

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By blok
28th Feb 2013 21:42

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He could sell it to the company and pay some tax?

Seriously though. George, what would llp achieve?

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